HSBC has revealed it is writing to 30,000 customers on tracker and variable-rate mortgages to explain the debt management benefits of making overpayments on their loans.
It encouraged borrowers to maximise on the 3.5 per cent fall in interest rates that has occurred since October and try to clear their debts.
The firm noted that Council of Mortgage Lenders data indicates that a typical UK tracker mortgage borrower who took out a loan during this period is now saving £218.08 per month, compared to their initial repayments.
Commenting on tracker customers, HSBC’s head of mortgages Martin van der Heijden said: “It is absolutely in their favour to make real use of today’s historically low interest rates. Overpaying their mortgage could reduce its term by years.”
However, he warned borrowers not to become accustomed to the low rates as they will have to increase at some point.
Meanwhile, Lloyds TSB and Cheltenham & Gloucester have seen a rise in the amount of requests from clients to set up mortgage overpayments.
By Jamie Price