Fears are growing for economic recovery as homeowners concentrate on reducing their debts rather than taking more on. This was the sixth consecutive quarter in which homeowners repaid more of their mortgage than they borrowed against the value of their home. In previous years, housing equity withdrawal has been used to support consumer spending.
With lenders offering the best mortgage rates to those with at least 25 per cent equity in their homes, there is clearly an incentive to borrowers to pay down their outstanding mortgage debt. And with unemployment continuing to rise, many people are looking to consolidate their finances by reducing their debts, rather than taking more on.