Alliance & Leicester: Mortgage holders save less

Families with mortgages are saving less and also reducing their monthly borrowings, according to a new report by Alliance & Leicester.

It reveals that people saved 2.1 per cent of their income in the first quarter of 2007 and 3.1 per cent during the second quarter. People with mortgages had 52 per cent less savings than those without, up from 46 per cent in January.

The report also says that people with mortgages are 50 per cent more inclined to reduce credit card debts and other unsecured borrowing than the rest of the general population.

According to the bank, the decrease is down to the five separate base rate increases since summer 2006.

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

Credit Action reports that more than 7.4 million household bill payments were late or missed between April and October 2007. It also says that one in four Brits have no savings whatsoever.

© Adfero Ltd

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