Research has shown that homeowners in England and Wales experienced a 20 per cent drop in mortgage costs during last year.
The Woolwich told Telegraph.co.uk that the average monthly mortgage repayments went from ?607 in December 2008 to ?497 in the final month of 2009, following the Bank of England base rate being reduced. This means that homeowners spent just ?157 of every ?1,000 of take-home pay they received on their mortgage in December, a ?39 reduction from a year ealier.
Despite most of the steep reduction to the base rate occurring by the end of 2008, the benefits from the cuts could only be taken advantage of by homeowners ? on fixed-rate deals ? once their mortgage deal ended and they went on to their lenders? standard variable rate, which led to the average mortgage costs falling drastically during the year.
Andy Gray, head of mortgages at Woolwich, told Telegraph.co.uk: ?For the 11 million UK households who have a mortgage there is a silver lining to the recession ? a substantial reduction in mortgage payments right when they need it most. For them it?s a chance to save in a way they might not have been able to before, or to overpay their mortgage and cut years from its life.?
Locations that saw the biggest reduction in the proportion of their take-home pay that they spent on their mortgage were those in London and the South West, at 23 per cent and 22 per cent respectively. Homeowners in the North East saw the smallest reduction at 15.5 per cent, with people in Wales, the East and North West all seeing an 18 per cent fall.
