CML: Homeowners may take advantage of low interest rates

Homeowners, including buy-to-let landlords, could pay off their mortgages earlier than expected by taking advantage of low interest rates, according to the Council of Mortgage Lenders (CML).

The comment follows the publication of a survey by Co-operative Banking, which revealed that the number of people making overpayments on their home loans has increased by 56 per cent on last year.

Bernard Clarke, a spokesperson for the CML, said that by maintaining payment levels and not adopting a reduced rate brought on by lower interest, mortgages could be paid off earlier.

"If you're a borrower who's on a variable interest rate and you've seen your borrowing costs reduce as a result of reductions in base rates, you may decide to overpay your mortgage in order to clear the commitment earlier than you anticipated," he added.

The Co-operative report also showed that customers within their initial mortgage deal periods can currently make overpayments of up to ten per cent without facing penalties, while people with lifetime tracker deals have no restrictions on making overpayments.

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