Are borrowers really making a conscious effort to pay down debt?

Thrugelmir

From the CML evidence that there is material repayment of mortgage debt. Interesting article.

Much of the press reported this as "UK households paying down debt more quickly". But the real story is more complicated. And in fact there is little sign of borrowers making a concerted effort to pay down mortgage debt, at least in aggregate terms.

Small adjustments, big impact

So we need to look further into the numbers to find what is driving net lending lower. To a large extent it is driven by low new total lending while underlying repayments remain fairly steady

Conclusion

So there is little evidence that households, at least in aggregate, are currently making any extra efforts to pay down their mortgage debts more quickly. What is more difficult to know is whether there are some groups of borrowers who are following this path, while at the same time other groups are actually paying down less, possibly as a coping strategy to overcome a loss of income during the recession.

http://www.cml.org.uk/cml/publications/newsandviews/48/160

MyLastFiver

Are people taking advantage of low mortgage payments to repay unsecured borrowing? Well, that's what I'm doing.

PasturesNew

As a saver who has had interest rates dropped (money taken from me) so that borrowers pay less interest (money given to them that they didn't expect).... I'm not sure if I'd be more annoyed if they had settled their debt with it, or if they'd spunked it up the wall buying tat.

nearlynew

Given the nature of our debt-fuelled consumerist society; where a lot of individuals, companies and the government have relied too heavily on cheap credit to live beyond their means, I find it hard to believe that many people are taking advantage of lower rates and paying down their mortgage.

I don't care about reports and statistics, I just know that most people who could have benefited will just see the extra money as a way of maintaining a lifestyle they cannot afford.

And all the while praying for house prices to rise.

They just can't help it.

b0rker

PasturesNew wrote: »

As a saver who has had interest rates dropped (money taken from me) so that borrowers pay less interest (money given to them that they didn't expect).... I'm not sure if I'd be more annoyed if they had settled their debt with it, or if they'd spunked it up the wall buying tat.

It's funny how you look at that.

As a mortgage holder I certainly won't be accusing you (a concerted saver) of taking money from me when the BoE rate goes up and I have to pay more on the SVR I am currently on.

I love the wholly inappropriate nature of the emotive language that the bears on this site use.

mewbie_2

b0rker wrote: »

I love the wholly inappropriate nature of the emotive language that the bears on this site use.

It is easier to be coolly detached when either 'winning' or not affected.

b0rker

We paid £20,000 off of our mortgage earlier this month.

mewbie_2

b0rker wrote: »

We paid £20,000 off of our mortgage earlier this month.

Reported.

That is just inflammatory.

nearlynew

b0rker wrote: »

It's funny how you look at that.

As a mortgage holder I certainly won't be accusing you (a concerted saver) of taking money from me when the BoE rate goes up and I have to pay more on the SVR I am currently on.

I love the wholly inappropriate nature of the emotive language that the bears on this site use.

Lending money to the bank (saving) and borrowing money from the bank both carry risks.

But a level playing field would be nice.

b0rker

mewbie wrote: »

It is easier to be coolly detached when either 'winning' or not affected.

I don't see myself as winning anything.

My mortgage has been a cause of great concern to me over the past 2 years what with the state of the market.

I consider myself lucky to have kept my job. Nothing more than that.

Ingsy

I can only talk from personal experience, and I am overpaying the mortgage. Dropped onto a an SVR at the end of Feb that was lower than the fixed we came off of, so set up a DD for the difference.

Spent this year building savings after a wedding last year. Plan to chuck money at the mortgage like mad next year.