NEWS

Homeowners scramble to pay off mortgages

Home owners are using their savings to pay off a record amount of their mortgages, figures reveal.

They reduced their home loans by £8 billion in the final three months of last year, the biggest injection of cash since records began in 1970, according to the Bank of England.

Falling house prices have eroded much of the equity left in people's homes while fears about rising unemployment has encouraged many to reign in their spending and focus on paying off their debts instead.

Andrew Montlake, of mortgage brokers Coreco, said: "People's number one priority in these uncertain times is to put money into their homes, not to take it out.

"Saving and paying down debt, as opposed to tapping into your home for another exotic jaunt abroad, is now in vogue, and as dull as it may seem it is just what the doctor ordered."

In recent years, home owners have increasingly relied on being able to cash in the value of their homes.

Equity withdrawals have been falling from a peak in the last quarter of 2003, when in the three months between October and December home owners increased their borrowing by a massive £17.1 billion.

However, the latest Bank of England figures show the picture has changed significantly since then, and in the first three months of last year the withdrawal figure had fallen to £6.6 billion as mortgage costs increased and borrowers grew concerned about house prices.

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