According to figures from the Bank of England homeowners have been paying off their mortgage debt for the last 7 consecutive quarters. This contrasts the normal trend of mortgage debt growing as more and more people start on the property ladder and people remortgage to make use of the equity they have built up in their property.
In the last quarter of 2009 around £4bn of equity was pumped into property, approximately £40bn over the last 2 years.
As interest rates have hit an all time low many mortgage borrowers are choosing not to reduce their monthly payments. These people will see their mortgage balance cut and experts believe this is the main reason behind the massive reduction in mortgage debt.
Craig Gedey Marketing Manager at Debt Advisory Line commented: Unfortunately the reality is that not everyone can afford to make mortgage overpayments and those struggling arent always able to release equity in their property. In this situation Debt Advice is the best option.
Debt Advisory Line has been voted The Debt Management Provider of the Year in 2008 and 2009. We offer professional and confidential debt advice.
How will this affect savings and borrowing?
Because mortgage debt is being repaid and the mortgage funds available to lenders comes from retail sources, according to property website www.obligo.co.uk , this means that lenders have funds which needs to be lent on again to generate interest to pay savers and investors. Experts believe that lenders will be put under increasing pressure to lend so that they can generate the returns needed to ensure profitability.
As the future may hold a change of Government because of the general election in May, any regulatory changes and the pressure on lenders to lend should help revitalise the mortgage market as borrowers find it easier to get their mortgage or loan.