Lloyds: Make the most of mortgage savings

Consumers have been advised to make the most of the money they will save as a result of recent falls in the rate of interest.

According to Stephen Noakes, marketing director at Lloyds TSB Mortgages - which was one of the banks to recently announce it is passing on the full 1.5 per cent interest rate cut to some of its customers - consumers will soon find themselves with extra cash.

He said: "We would encourage homeowners to use this opportunity to reassess their financial situation and take action by addressing outstanding debts, protecting the equity in their home or growing a nest egg."

The expert went on to advise consumers to prioritise paying off any outstanding debt, such as store or credit cards, first.

Following this, standing orders can be set up to transfer any additional money into savings or to make overpayments on mortgages and thus reduce the size of the loan, he added.

The cuts in mortgage rates announced by lenders followed pressure from the government, which told banks that they were under an obligation to pass on the reduction in the UK`s base rate of interest made last week.