Britons repay mortgage debt at record levels

| July 5, 2009 | 1 Comment
”Britons

The days in which Britons used their houses as banks and paid for home improvements and lifestyles by regularly remortgaging and drawing on equity have long passed.

Stricter lending criteria and falling house prices resulted in homeowners paying back a record £8.1 billion during the first quarter of 2009, according to the Bank of England.

The combined mortgage debt held by UK homeowners has now fallen for the fourth successive quarter and the trend is accelerating with the latest figure topping the £7.8 billion repaid in the final quarter of 2008.

Alarm bells about the extent to which consumer spending was supported by equity withdrawn from homes were first heard as far back at 2002 but the bonanza only finally peaked in the final quarter of 2006, at £13.7 billion.

The credit crisis then saw an abrupt end to the practice as mortgage finance became tight, house prices started to fall and both lenders and homeowners began to harbour fears over negative equity.

The level at which Britons are now repaying mortgage debt also reflects record low interest rates.

Mortgage costs have fallen and for those with cash to spare saving rates are so low that clearing debt is an attractive option.

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  1. James W says:

    times have indeed changed.

    the best plan while interest rates are so low is to make overpayments on your mortgage. it’ll end up saving you thousands in the long run.

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