Borrowers cutting back over festive period

Almost two thirds of remortgagers intend to reduce their festive spending this year in order to cope with the expected payment shocks that will materialise when they change deals.

Research from Lloyds TSB has revealed that 64 per cent of those due to remortgage before the end of the year said that they would be cutting back, no doubt because 71 per cent believe their payments will rise once their current deal ends.

The younger generation will be easing off the spending the most, the study suggested, with more than 75 per cent acknowledging that they would be spending less on Christmas.

"Cutting back on festive spending offers a short term solution but it's a good idea for people with mortgages to take a longer term view of their financial situation to ensure their mortgage is suited to their specific needs and changing circumstances," said Alison Burns from Lloyds TSB.

"Some consumers may prefer a stepped rate deal that allows them to ease into the new higher interest rate environment.

"Other homeowners might opt for a tracker product, which will enable them to benefit from any potential drops in interest rates," Ms Burns added.

Homeowners are neglecting to take mortgage fees into account when looking for the best deal, according to recent research from Moneysupermarket.com.

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