Home owners make record mortgage payments

New figures released by the Bank of England have shown that British home insurancepolicy holders paid more towards their mortgages in 2010 than in any other single year, prompting financial experts to express concern that Britain's consumer economy could suffer as householders tighten their spending in a bid to reduce their debts and secure their homes.

The Bank of England has revealed that mortgage borrowers re-paid £24 billion in 2010 - the highest repayment levels on record. £7 billion of the £24 billion total was repaid during the last three months of 2010 - a record high for repayment levels over a single financial quarter.

Analysts at the Bank of England explained that the figures demonstrate a switch in consumer behaviour that has been triggered by the recession.

While nervous homeowners are now moving to reduce the debts against their property, during the boom years of 1998 to 2008, home owners borrowed £328 billion against the value of their homes and used equity withdrawal to fund personal spending.

According to The Telegraph, economists have forecast that the growth of Britain's economy could be seriously hampered if home owners continue to invest in their homes and debt reduction plans, thereby continuing to reverse the boom-time trend of removing equity from the home to fund consumer spending.

Economist Howard Archer told the publication: "Consumer spending is about 65 per cent of Britain's income and so if consumers do not spend then it will be very hard for the economy to see decent growth."

Tue, 05 Apr 2011 05:01:00 GMT