05 April 2011

£7 Billion Of Mortgage Debt Paid Off In Fourth Quarter of 2010

According to the Bank of England’s (BoE) records homeowners have paid off their mortgages at a record rate. £7 billion of debt was paid off in the final quarter of 2010.

The performance in the fourth quarter of 2010 built on an already solid performance earlier in the year. 2010 saw the largest input of equity ever recorded.

Due to interest rates being maintained at a record low, homeowners have been more inclined to pay back larger slices of their mortgage than they are required to each month. Low interest rates have been married to low savings rates therefore giving an extra incentive to reduce mortgages rather than save money.

One knock on effect of high spending on mortgage repayment is lower spending on other goods: Consumer spending is at a low as people are more inclined to pay off debts rather than spend on material goods.

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