Mortgage debt reduced by
£4.91bn

The outstanding mortgage debt on British homes was reduced by £4.91 billion during the third quarter of the year, new figures show.

The economic downturn and the recent house price falls have caused homeowners to focus on repaying their debt, and not unlock equity from their homes.

Equity withdrawal enables homeowners to cash in on rising house prices by increasing their mortgages to convert some of the rise in the value of their home into cash.

But the rate at which people are paying down their mortgage has slowed for the third consecutive quarter, according to the Bank of England.

Consumers' focus on paying down their mortgages is in stark contrast to previous years, when people released equity from their properties to fund large purchases.

The rate at which people unlocked money from their homes peaked during the final quarter of 2003, when a record £17.03 billion was released.

But since homeowners stopped unlocking equity in the second quarter of 2008, they have repaid a total of £33.89 billion.

Copyright © Press Association 2009
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