Housing equity withdrawal hits new low in Q2 2011
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Data out from the Bank of England shows housing equity withdrawal fell to -9.1bn in Q2 2011, down from -£8.9bn in Q1.
HEW has been in minus figures since Q2 2008 when it fell from £3.9bn in Q1 2008 to -£2.4bn. Up to 2008 HEW had last been in negative figures in Q2 1998.
But the Bank has clarified in its latest quarterly update that the decline in HEW - and move to injections of housing equity - since the start of the financial crisis is not the result of an increase in repayments of secured debt.
It says that gross secured loan repayments have fallen since that time, which has reflected both lower housing market activity and a reduction in remortgaging.
Instead the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households are making an active effort to pay down debt more quickly than in the past.
HEW is classed as the balance of effects on the stock of housing equity from:
1. Changes in the stock of secured lending when households take out or repay debt.
2. Changes in the stock of housing wealth, e.g. when new properties are built or improvements are made to existing properties.
The stock of housing equity can also change as a result of revaluations of the stock of housing wealth due to changes in house prices, but this is not included in HEW.
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