Fewer people are borrowing against their home due to falling house prices, it has been suggested.
People are borrowing less and less through equity release, a new report has found.
The Bank of England figures provide further evidence for a property downturn, by showing that less money is being borrowed against the value of homes. It is thought that reports of falling house prices in the ongoing general economic downturn has served to put many off releasing equity in this way.
According to the Bank, total loans garnered through equity release hit £5.04 billion over the first quarter of 2008. This is down on the £7.37 billion borrowed in the last three months of 2007 - and on the £13.89 borrowed in the first quarter of 2007.
House prices have continued to drop in the UK since the last survey was taken, meaning that equity release is likely to register a further fall for the second quarter. Earlier this week, research from Nationwide showed that the average property cost had fallen by 0.9 per cent over June, while in a separate survey researchers at Hometrack released analysis showing a decline of 1.8 per cent.
Howard Archer, chief UK economist at Global Insight, added: "Sharply reduced housing equity withdrawal will add to the mounting pressure on consumer spending already coming from modest disposable income growth, rising utility bills, elevated food prices, tighter lending conditions, higher mortgage rates, increased debt levels, tighter and, now, rising unemployment.
"This reinforces belief that we are in for an extended period of consumer retrenchment."
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