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'Big savings possible for variable rate mortgage holders'

Mortgage holders should use a cut in interest rates tomorrow to reduce their repayment term, a price comparison site has said. Analysts widely expect the Bank of England’s monetary policy committee to cut interest rates by 0.25 per cent tomorrow. Homeowners who stand to benefit most from this are those on variable rate deals and trackers, who will find their repayments significantly reduced. However, rather than put the money away or spend it, the most prudent use of the cash would be to reinvest it in their mortgage, Julia Harris, an analyst with claims.In so doing, the firm calculates a mortgage holder with a 25-year, £100,000 deal could cut their repayment period by nearly a year and a half and save themselves £4454.81. Should the bank cut rates by 0.5 per cent, which is being demanded by the retail sector, a saving of £7,781.49 would be possible, with the holder’s repayment term being reduced by 27 months.

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