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Friday 03rd of April 2009
April 1, 2009

Britons repay £8bn of mortgage debt


by Gill Montia
Britons repay £8bn of mortgage debt

For the ninth consecutive month UK homeowners paid back more of their mortgage debt than was borrowed.

Before the credit crisis Britons tended to use their homes as banks, withdrawing equity for home improvements and to meet a variety of other expenses, including “champagne moments” such as holidays in exotic locations.

Recession Britain tells a different story with mortgage borrowers fearful of negative equity and losing their jobs.

People are anxious to increase the amount of equity held in their properties and in addition, falling interest rates have helped those on tracker and standard variable rates to make regular overpayments.

The trend for withdrawing equity and increasing mortgage debt reversed last year, when concerns about the downturn in the housing market and the economic outlook met with a shortage of mortgage finance.

As the credit crisis deepened, banks and building societies restricted their lending offering the best deals to those with at least 40% of equity in their homes.

As a result, Bank of England figures show a further £8 billion was wiped of the UK’s mortgage debt between October and December 2008.

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