Mortgages across the UK were reduced by £8 billion in the last three months of 2008 according to recent figures released by the Bank of England. This is the highest reduction in a three month period since records first started in 1970.
Falling interest rates has meant savings are producing a poor return in these uncertain times and the fall in house prices has reduced the level of equity people have in their homes. The rise in unemployment has left people reigning in their spending and focusing instead on reducing their debt.
At the same time, the falling interest rates has made it easier for homeowners to reduce the capital they owe on their mortgage.
Andrew Montlake, of mortgage advisors Coreco, said:
“People’s number one priority in these uncertain times is to put money into their homes, not to take it out. Saving and paying down debt, as opposed to tapping into your home for another exotic jaunt abroad, is now in vogue, and as dull as it may seem it is just what the doctor ordered.”
