Figures from the Co-Operative Bank also reveal people's motivations behind making overpayments, with 80% doing so because they believe it makes financial sense due to the current low return on most savings rates.
The Co-Operative Bank also found that some 37% of people making overpayments were doing so because their rate has fallen due to the drop in base rate, and almost one in ten are hoping to secure a better mortgage deal by making overpayments.
'Our internal data has shown a 50% increase in our mortgage customers making overpayments. It would appear that with interest rates now at an historic low, customers are recognising more than ever the benefits of making overpayments,' said Terry Jordan, head of mortgages at The Co-operative Bank.
The figures also identified why people were not overpaying on their mortgage. Apart from lack of income, almost a third of those not overpaying would prefer to put their money into savings and 24% of people are spending any excess money they have on holidays and clothing.
'Providing their mortgage allows the flexibility to overpay, at the current time it can make real financial sense for customers to make even small monthly overpayments, as these can really add up to a large difference over the lifetime of the mortgage,' added Jordan.
A spokesperson for the Council of Mortgage Lenders said it is a growing trend. 'Many borrowers are now benefiting from lower mortgage rates and as a result are considering overpaying on their mortgages to reduce their mortgage balance and protect themselves against falling house prices,' a spokesman said.
'Overpaying on your mortgage will improve your equity position, reduce your interest payments and can shorten the length of your mortgage. And now is also a good opportunity for borrowers on interest only mortgages to switch to repayment mortgages to use this period of low interest rates to start to pay down their loans,' he added.
