Homeowners in the UK repaid an unprecedented £8.1 billion on their mortgages in the first three months of 2009. This is considered as the result of record low interest rates to reduce debt burden. These figures are available in the latest report of Bank of England.
UK Borrowers added to their housing equity for a fourth quarter, paying in a net 8.1 billion pounds ($13.2 billion), which was the most since records began in 1970. The Bank of England released the data on its Web site in London on 3rd July, 2009.

The mortgage equity withdrawal report is for the first quarter of 2009. The report reflected a rise in the amount of capital invested into the housing market from £7.8 billion in the fourth quarter of 2008. It is an increase from a withdrawal of £6.7 billion in the first quarter of the same year.


The trend indicates that the recession has prompted people to limit borrowing and to take advantage of the low interest rate, currently 0.5 per cent, to help pay off their home loans. Homeowners are clearly and sensibly taking matters into their own hands, rather than just sitting around waiting for the market to eventually pick up.

The country is experiencing the worst recession in a generation as banks curb lending, pushing up unemployment. While the housing market is showing signs of stabilizing, prices have declined 20 percent since 2007, according to Bank of England figures, making it more difficult for consumers to borrow against the value of their home.


The figures also reflect the ongoing difficulty obtaining mortgages among borrowers who do not have much equity and are unwilling to take on additional debt as house prices fall.
The net injection of housing equity accounted for 3.5 per cent of post-tax income in the first quarter of 2009. In contrast, net housing equity withdrawal had been 6.2 per cent of post-tax income in the fourth quarter of 2008.

The development is an indication that sharply falling house prices have made housing equity withdrawal increasingly unattractive, while very tight credit conditions have made it more difficult to carry out the process as well as to take out new mortgages. Experts expect consumer spending to remain relatively subdued over the remainder of this year.

As per reliable data of the Office for National Statistics, gross domestic product in the UK fell 2.4 percent in the first quarter, the most since 1958. Second quarter surveys suggest the recession is easing, and Nationwide Building Society said this week that house prices increased 0.9 percent in June 2009.