New figures have revealed that UK householders are paying off their mortgages at record pace, cutting their debt by £13 billion in the first quarter of 2015 alone. The Bank of England statistics have shown that Britain’s homeowners are now paying their debt down, in a reversal of trends in the years leading up to the financial crash.
The first quarter of 2015 marked the 28th successive quarter of net injection of equity into houses, taking the total to £313 billion since June 2008. Despite the improvement in the economy, the figures have surprised economic experts.
The first quarter repayment figure of £13 billion was a record high, up from £12.6 billion in the first quarter and £11.1 billion in the same quarter last year.
Howard Archer, of IHS Insight, told the Guardian: “There is a compelling case for many people to be looking to take advantage of very low mortgage interest rates to reduce their outstanding mortgage balances to improve their personal balance sheets – if they can afford to do so. Furthermore, extremely low savings interest rates have undeniably made it much more attractive for many people to use any spare funds that they have to reduce their mortgage balances rather than put the money into savings accounts.”
In previous statements, the Bank of England has said the fall in equity withdrawal is likely to reflect a fall in the number of housing transactions, and is cautious about attributing it to decisions to actively pay down debt more quickly.