Home Owners Paying Off Mortgages At Record Rates
Home owners have abandoned he high street in favour of paying off their mortgages, it has been revealed. This decision to pay off debt at record levels will have a considerable impact on the growth of the economy.
Figures obtained from the Bank of England have shown that borrowers increased the equity in their homes by a staggering £7 billion during the last quarter of 2010. This indicates a dramatic turn around in Britain’s spending habits considering that three years ago a similar sum was being released from home owners properties to finance large purchases.
Austerity measures and the constant dismal economic forecasts in the media has brought this all about by by frightening the general public into tightening their purse strings. Paying your mortgage down is of course a very sensible plan of action considering that savings rates offer very few rewards. It also places homeowners in a better position once base rates begin to increase again.This is all well and good until you consider the fact that consumer spending accounts for about 60% of Britain’s income.
The fragility in the economy will however dissuade the Bank of England from increasing the base rate in the short term especially with inflation starting to stabilise at the moment.
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Julian England (Property Manager)