Homeowners better off this year than last - BoE

Low interest rates mean a quarter of UK homeowners are at least £200 a month better off today than they were this time last year, according to the Bank of England (BoE).

In its Quarterly Bulletin, released today and based on a survey of 2,000 households, it says the average fall in mortgage repayments compared to this time last year is £130, with almost a quarter benefiting by more than £200.

It adds pay freezes and a lower inflation rate have helped to protect jobs and mean unemployment is below forecasted levels.

However the picture is not all positive, with mounting concern about inflation risks and the security of Government borrowing leading investors to seek refuge in a host of inflation-proof investments.

This is expected to add to concerns Britain remains exposed either to a fiscal crisis or an inflationary spike as the Government seeks to reduce its mounting debt levels.

The BoE report also highlights improvements in various measures of the London Interbank Offered Rate, (LIBOR) the benchmark for wholesale lending costs, may have disguised the fact many companies are finding the cost of borrowing extremely expensive.

Additionally, more than one-in-four households with a non-manual worker has seen their income after paying tax, national insurance, housing costs, council tax, loan payments and debt drop by more than £100 to an average of £3,981 over the past year.

Almost a third of "manual households" have suffered a similar drop to £2,291 while nearly half those unemployed over the past year are said to be £100 worse off.