Britons cut mortgage debt by £9.8bn
Wednesday 03 October 2012
Britons reduced their mortgage debt by £9.8 billion in the second quarter of this year as the housing market remained subdued, Bank of England figures showed today.
The study indicates that households are putting more money into the housing market, through mortgage repayments for example, than they are taking out.
However, the Bank said there was "little sign" that households are trying to pay down debt more quickly than in the past, and a lack of activity in the housing market and a reduction in re-mortgaging are underlying the figures.
There has been a general trend towards injections of housing equity since the start of the financial crisis, with a reduction of £9.6 billion in mortgage debt in the first quarter of this year.
Howard Archer, chief UK and European economist for IHS Global Insight, pointed out that the latest figure is creeping back up towards a record £10.2 billion housing equity injection seen in spring 2011 and there have now been net injections of equity for 17 quarters in a row.
This has brought the cumulative net injection of equity into houses to £133.2 billion since the second quarter of 2008.
Dr Archer questioned the Bank's analysis that there was little sign that families are generally making an active effort to pay down their mortgage debts more quickly.
He said: "Extremely low savings interest rates have undeniably made it much more attractive for many people to use any spare funds that they have to reduce their mortgages.
"In particular, many people may be using the extra money that is resulting from their very low mortgage interest payments to reduce the balance that they still owe on their houses."
The latest figures were released on the same day that a few hundred thousand Santander customers saw their mortgage costs increase, as the lender hiked its standard variable rate, resulting in an average increase of £312 a year for a typical £100,000 mortgage.
More than a million home owners saw their mortgage rates increase in May as lenders such as Halifax, the Co-operative Bank and Clydesdale and Yorkshire Banks raised their SVR rates, even though the Bank of England base rate remained at a historic 0.5% low.
The Bank of England and the Treasury introduced an £80 billion funding for lending scheme at the start of August to help kickstart lending to households and businesses.
Lenders have said this has already caused mortgage availability to increase, although they have also tightened their borrowing criteria in recent months, meaning people have higher hurdles to jump in order to take out a deal.
Figures recently released by the British Bankers' Association (BBA) showed that mortgage approvals for house purchases were 13% lower than a year ago in August.
The BBA said that consumers are continuing to act "conservatively" in the weak economic environment, by paying down their debts and building up their savings.
Total mortgage approvals have been creeping back up from a low point in June, which saw the smallest number of approvals the BBA had in its records, which stretch back to 1997.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Five Questions: Changes to car tax discs
Ticking time bomb: Interest rate rises are coming, so start preparing now
More than 300,000 adults are too deeply in debt to apply for bankruptcy
What is pension death tax, what is going to change and how will it affect you?
Almost two million people are facing winter weather without heating
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 HeForShe campaign: Iceland to follow up Emma Watson speech with UN women's rights conference – for men only
- 3 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 4 Ed Sheeran dedicates song to David Cameron
- 5 Now we know whose fault it is if you end up being murdered in Thailand
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
Day In a Page
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors