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Mortgage repayments continue to increase

For the sixth quarter in a row homeowners in the UK have repaid more mortgage debt than they have borrowed which is an indication that perhaps many are now looking to manage their debt through this short term turbulent period. As we mentioned in one of our articles yesterday, net mortgage repayments in the UK reached £4.9 billion in the third quarter of 2009 and there are expectations that this trend will continue into 2010.

While potentially one of the cheaper debt instruments on the market at the moment, compared to credit cards and personal loans, there is a suspicion that some people are using their savings to repay their mortgage debt. When you consider that savings rates are near rock bottom, significantly less than many mortgage rates, this is perhaps one of the more sensible ways in which to manage your debt in the short term at least.

However, there is concern that many homeowners in the UK believe that by repaying more of their mortgage debt than they are obliged to, they will receive some breathing space from their mortgage lender in the future. Unfortunately, this is not necessarily the case as mortgage lenders will still demand minimum payments in the future even if recent payments have been above and beyond the minimum requirement.

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