First-time buyers 'could look to low interest rates to reduce mortgage debt'

29-Dec-2009

First-time buyers could look to low interest rates to reduce mortgage debt

First-time buyers looking to get a clear picture of the future of the housing market may be interested to learn that Britons reduced their mortgage debt by close to £5 billion in the third quarter of 2009.

According to figures released by the Bank of England, homeowners injected a total of £4.9 billion into their housing debts - making it the sixth consecutive quarter in which more money has been spent paying back loans than borrowed.

The cash flow came from home equity withdrawal , which allows consumers to borrow off properties not locked into the housing market, enabling them to take advantage of upsurges in house prices.

Chief European economist at IHS Global Insight Howard Archer speculated the debt reduction was due to low interest rates and "the consequence of the increased desire of many people to improve their personal balance sheets given the worrying economic situation".

However, the statistics show reduction in mortgage debt has slowed down since the first and second quarter of the year.


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