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Mortgages 'repaid at faster rate'

Homeowners continued to increase the rate at which they are paying their mortgages during the third quarter of 2010, figures have revealed.

 

According to the Bank of England, borrowers reduced their outstanding mortgage debt by £6.1 billion during the three months to the end of September.

It was the 10th consecutive quarter during which the amount of money people unlocked from their homes was negative. The figure was also the biggest net injection of equity people have made into their homes since the first quarter of 2009.

Benjamin Williamson, senior economist at the Centre for Economics and Business Research, said: "Today's large negative figure for housing equity withdrawal is the result of homeowners rebuilding their savings, in the same way that we have seen monthly repayments in unsecured lending over the last year.

For more than two years now homeowners have been investing more in their properties than they have been taking out in new secured loans, injecting nearly £50 billion into housing equity since the second quarter of 2008. We expect this consumer de-leveraging to continue well into 2011 and beyond.

"Ultimately it will be to the long-term benefit of the housing market and the stability of the economy, although it will mean a shortage of finance for consumer spending in the short term."

Copyright © Press Association 2010

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