Homeowners Paying Off Mortgages More Now Than in Past Years
As a whole UK homeowners are paying off their homes and raising equity. The Bank of England released figures revealing that in 2007 UK homeowners had borrowed 87 billion pounds against the inflated value of their homes, this was usually to consolidate debt or purchase a big ticket item. Yet, two years later UK homeowners have raised equity levels in their homes by 38.3 billion pounds.
The increased equity was due to homeowners paying off more of their mortgage and the fact that lenders required higher deposits from new borrowers. Analysts saw this as a clear change in behavior of homeowners over the last decade. Low interest rates, as well as financial fears in the midst of the worse economic crisis since WWII have led homeowners to pay off their mortgages faster than before. The loss of job fears pushes many to seek stability in their property. The low interest rates have allowed many to "overpay" while on standard variable rate home loans. UK homeowners increased the value of their stake in their properties by 3.2 billion pounds in the first quarter of 2010 alone.