Equity withdrawal levels fall
Housing equity withdrawal slump continues
Wednesday, 02 Jul 2008 11:33
The property market correction is leading to a slump in the housing equity market is continuing according to the latest figures from the Bank of England.
Just £5 billion was released in this fashion during the first quarter of 2008, accounting for 2.2 per cent of income after tax of UK residents.
This was the lowest level since the second quarter of 2001.
The figure is down from the £7.4 billion released in the final quarter of 2007, as well as the £11.4 billion in the third quarter and a peak of £13.9 billion in the first quarter of 2007.
During the peak early last year equity release schemes accounted for 6.3 per cent of income after tax in the UK.
It is thought higher mortgage rates, markedly tighter credit conditions and falling house prices have substantially reduced the attractiveness of, and scope for, housing equity withdrawal.
"Sharply reduced housing equity withdrawal will add to the mounting pressure on consumer spending already coming from modest disposable income growth, rising utility bills, elevated food prices, tighter lending conditions, higher mortgage rates, increased debt levels, tighter and, now, rising unemployment," commented Howard Archer, of analysts Global Insight.
"This reinforces belief that we are in for an extended period of consumer retrenchment."
Chris O'Toole