Cautious consumers paying down debt

Britons have continued to take advantage of record low interest rates, figures have shown, paying down their outstanding mortgage debt by £3.2 billion during the first quarter.

It was the eighth consecutive quarter that the amount of money consumers unlocked from their homes was negative.

Bank of England figures show homeowners have collectively injected £38.3 billion into their housing equity since the trend began in the second quarter of 2008.

But the rate at which people are paying down their mortgage slowed for the fourth consecutive quarter, falling from £3.43 billion in the final three months of 2009 to reach its second lowest level since repayments first began to outstrip equity release.

The rate at which people were repaying their mortgage peaked during the first quarter of 2009, when the economic downturn and falling house prices led to homeowners injecting £7.34 billion back into their properties.

Equity withdrawal enables homeowners to cash in on rising house prices by increasing their mortgages to convert some of the rise in the value of their home into cash. The money is typically used to fund big purchases such as cars or home improvements, or for debt consolidation.

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