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Home owners pay off £4bn of mortgage debt

Home owners injected £4bn of equity into their homes in Q4 2009, as low interest rates prompted people to pay off their mortgage debt.

The latest figures from the Bank of England show the £4bn was deposited between October and December 2009, the seventh quarter in a row where the amount people unlocked from their homes was negative.

However it compares to £5.1bn in 2009 Q3, and marks the fourth consecutive slowdown in the rate at which people are paying off their mortgage debt.

The level of repayments peaked in Q4 of 2008, when homeowners injected £7.11bn back into their properties.

Catherine Penman, head of research, property consultancy, Carter Jonas, says: “Home owners are continuing to pay down their mortgage debt, although not at quite the same levels they were a year or so ago.

“While this is a positive development for the property market, either helping home owners out of negative equity or enabling them to secure better rates at lower LTVs, there are obvious ramifications for the economy as a whole.”

She adds: “The more that is spent on paying down mortgages, the less that is spent on the high street, which is essential to the recovery of the economy.

“In the short term, debt paydown is also restraining property transaction levels, although the fact that conservative spending patterns remain a priority for the average UK household is no bad thing given the profligacy of the past decade.”

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  • Grey Haired Underwriter 7th April 2010 at 12:12 pm

    I would love to see an age demographic to go with this story. Is there a specific age group paying down their mortgages because they have experienced higher interest rates or payment shock?

  • Martin Tapper 6th April 2010 at 11:40 am

    Yes debt reduction has been a priority for many clients, but there are indications that many have used the additional spending power released as a consequence of remaining on the lender’s SVR to spend on everyday items. See the additoinal profits of supermarkets. How are so many able to afford to pay for motor fuel which is 20% more expensive than post crash!?