British householders have been paying off mortgages in record amounts due to the drop in house prices and historically low base rate, the Bank of England has revealed.
Mortgage repayments have reached record levels as Brits take advantage of the unprecedentedly low Bank of England base rate.
According to a report from the Bank, homeowners have shied away from taking equity from their homes as a result of the collapse in property prices. In response, they have been reducing mortgage debt in never-before-seen amounts.
The Bank revealed that total UK mortgage debt fell by £8 billion in the last quarter of 2008. This is the largest decrease since records began in 1970.
Housing equity withdrawal has proved popular with homeowners since 2000, with more than £300 billion being generated through the process. But the amount of cash being taken from homes fell for the third consecutive quarter.
But David Breger, a partner at chartered accountants HW Fisher, warned that the news was not necessarily for the best.
"While it is good to see people paying down their debt and building up equity in their homes, this process is bad news for business and the economy," he said. "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."
