Homeowners knock £3.2bn off mortgage debt
UK households cut their outstanding mortgage debt by £3.2 billion during the first quarter.
Friday, 16, Jul 2010 01:51
Britain's homeowners reduced their collective mortgage debt by £3.2 billion between January and March, according to new figures from the Bank of England.
In the past two years, households have paid off £38.2 billion on their property loans.
This marks a sharp reversal from the end of the 90s, when rising house prices encouraged people to use equity release to get hold of the money tied up in their home.
At the peak of this trend in 2003, Britons unlocked £17.06 billion from their properties.
However, the impact of the recession has forced homeowners to change tack and pay down debt rather than taking on more borrowing.
Indeed, the Bank's record low base rate of 0.5 per cent has persuaded thousands to concentrate on reducing their mortgage loans.
IHS Global Insight chief UK and European economist Howard Archer said: "This eighth successive - and still marked - injection of equity in the first quarter of 2010 is the consequence of the ongoing desire of many people to improve their personal balance sheets."
According to Credit Action, the average household debt in the UK including mortgage repayments stood at £57,944 in May.
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