Homeowners stop taking money from their houses

Date:Tuesday 30th December 2008
Author: Max Freedman

The number of people taking equity from their homes to pay for purchases has fallen for the second quarter in a row.

Figures from the Bank of England, cited by the BBC, show that people collectively put £5.7 billion into their homes through mortgage repayments from July to September, after having put £2 billion back from April to June.

This contrasts with the £11.1 billion householders took out from their equity from July to September 2007.

Andrew Montlake, partner at independent mortgage broker Cobalt Capital, said: "Not so long ago, an Englishman's house wasn't just his castle, it was his cash machine, too. This, very clearly, is no longer the case."

He added that people are keen to reduce their debts rather than add to them given the current economic climate.

In related news, David Kuo, head of personal finance at fool.co.uk, recently warned that taking a mortgage payment holiday could result in more debt problems further down the line due to interest increases.

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