Homeowners 'increasingly paying off mortgage debts'

Date:Thursday 2nd April 2009
Author: Max Freedman

UK homeowners are increasingly paying off their mortgage debts, Bank of England figures suggest.

According to the organisation, £8 billion of mortgage borrowing was paid off between October and December last year.

In addition, housing equity withdrawal, whereby consumers increase the size of their mortgage in order to spend money on such things as home improvements, was down for the ninth month in a row.

While such trends are good in that it means people are paying off their debts and building up equity in their homes, they are bad news for businesses and the economy, David Breger of HW Fisher chartered accountants claimed, the BBC reports.

He added: "If people are paying down their home loans, they are not spending and if they are not spending UK companies and the economy generally will continue to suffer."

Figures released recently by the Finance and Leasing Association suggested that second charge mortgage lending was down in January of this year compared with the same period in 2008.