Homeowners reduce saving contributions

Contributions made by homeowners are reducing around the UK, according to figures compiled recently by Alliance & Leicester.

Increases in the base rate of interest seen since August of last year have seen families with home loan arrears "pulling their horns" financially and many have been struggling to save, the high street lender reports.

Moreover, the amounts being borrowed via credit cards in households with a mortgage to pay have been falling in recent months as finances have become increasingly stretched, the latest research demonstrates.

Sean Murphy, director of strategic planning at Alliance & Leicester,
said: "Families are cutting back on their borrowing and their saving to help ensure they can afford higher mortgage and other household bills.

"Even though average interest rates on unsecured borrowings have actually fallen over the last 12 months, that has not been enough to tempt mortgage borrowers to take on more unsecured debt."

All but one of the nine members of the Bank of England's monetary policy committee voted for the base rate of interest to be maintained at 5.75 per cent when they met earlier this month.

26/10/2007 14:50:02