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Lloyds: Borrowers should 'overpay'

Monday, March 15, 2010

Source: Catherine Deshayes

The UK's biggest mortgage lender is urging homeowners to take advantage of low interest rates and speed up the process of paying off their mortgage.

Lloyds says the majority of people are missing out on the chance to pay less interest on their mortgage and potentially cut years off the term.

The bank says a homeowner with a £100,000 mortgage on a standard variable rate of 3.5% who overpays an extra £50 a month would slash their mortgage term by three and a half years and save £14,576.04.

Meanwhile, property asking prices in England and Wales were up by just 0.1% in March compared to 3.2% the previous month, new figures have shown.

Housing website Rightmove said the £216 rise was the lowest it had ever recorded for March.

The group put this down to a surge in the number of people putting their property up for sale during the four weeks to March 6.

The rise was partly due to people holding off putting their home up for sale due to the freezing weather during the early part of the year.

The number of homes on the market jumped by 17.5% compared with February and 34% compared with the same period of 2009 to stand at its highest level for 18 months.

Rightmove said the steep rise in competition among sellers had given people less opportunity to increase their asking prices.

The rise, which is in line with figures recently reported by the Royal Institution of Chartered Surveyors, is likely to reduce the current upward trend on house prices.

The mismatch between supply and demand has been a key factor in supporting the house price recovery, but many economists expect prices to resume their downward pressure as more homes are put up for sale.

Despite the small price rise, there was a sharp fall in the length of time a property is on the market for - falling from an average of 84 days to just 63 days.

Source: www.ananova