Households overpaid nearly £7 billion on their mortgages at the end of last year in a race against soaring interest rates, Money Mail can reveal.
Homeowners spent an unprecedented £23.3 billion overall on mortgage over-payments in 2022, paying off a record £6.7 billion in the past three months, according to analysis of government data by the Equity Release Council shared with Money Mail.
This is the first time quarterly over-payments topped £6 billion since records began in 1999.
Typically, homeowners can overpay their mortgage by up to 10 per cent without incurring fees, however some banks have increased this in recent weeks. Last month NatWest raised the allowance to 20 per cent.
The wave of overpayments was made in response to rising mortgage rates in October and November, which sent the cost of borrowing soaring for millions.
In October, the average two-year fix shot up to a 14-year high of 6.65 per cent, with five-year deals reaching 6.51 per cent in the same month.
And although rates have subsequently fallen, they are still much higher than pre-pandemic levels.
Around 1.8 million homeowners are due to come to the end of their fixed-rate mortgage this year, according to UK Finance. This means that they are likely to face a new deal at a much higher cost.
Those who have overpaid on their mortgages have done so in the hope of shielding themselves from the full force of high interest rates.
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Jamie Lennox, mortgage broker at Dimora Mortgages, says: ‘Some homeowners will have built up substantial savings when mortgage rates were lower. In the wake of the mini-budget, many households will now be thinking this money would be best spent in overpaying their mortgages.
‘Others will be cutting back on luxuries in order to put that money towards their home loan.’
In total, regular mortgage payments passed £15 billion in the final three months of last year.
And despite the increase in overpayments, total mortgage debt reached a record £1.6 trillion in December.
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