Since the onset of the global credit crunch the government and the Bank of England have been trying to find ways of boosting the ailing economy, housing market, and mortgage sector.

One way in which they hoped they could do this was by slashing the base interest rate to its lowest level in the three hundred and fifteen year history of the Bank of England.

Over a period of around seven months, from last October, the base rate was cut from 5 percent to just one tenth of this level, and now stands at just 0.5 percent.

For many homeowners who had been struggling to keep on top of crippling mortgage repayments whilst the base interest rates were high this meant being able to relax and enjoy the benefits of far lower mortgage repayments.

The government had hoped that homeowners would spend this extra money each month, which in turn would help to boost the economy. However, recent reports have shown that many households are not spending the money that they have been saving on their mortgage repayments each month, but have been putting it aside into savings.

Research shows that the average household has around £200 extra each month compared to last year, but many are putting this spare cash into savings rather than spending it.

One industry official stated: “Even though we’re still in recession, many UK householders who have not been hit by unemployment have experienced a dramatic upturn in their monthly budgets over the last year.”

He went on to state that “many consumers are using their increased monthly spending power to repair savings balances and pay off credit cards and other debts. These gains are certainly not being spent freely on the high street.”

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