Housing equity withdrawal remains in negative territory

Bank of England data released today shows that home owners are continuing to favour paying down their mortgages rather than borrowing more against the value of their homes.  Housing Equity Withdrawal (HEW) for quarter two of this year was again a negative figure of more than £9.1bn.  This compared to -£8.9bn in Q1 – another sign of the difficult conditions for the housing market.

There is undoubtedly a reticence among borrowers to increase the size of their debts and many are now taking a very different approach to their mortgage than they were a few years ago.  When house prices were booming it was commonplace to withdraw equity to fund lifestyle purchases such as a new car or holiday rather than the more traditional uses such as home improvements.

However, the Bank is quick to point out that there is little evidence to link the negative figures to a marked increase in borrowers overpaying on their mortgage.  It says that the figures do not show an increase in mortgage payments, but rather stem from a subdued housing market with a low number of transactions.

Of course with low interest rates at the moment, it makes a lot of sense for mortgage borrowers to consider making an effort to cut their mortgage as doing so will benefit them in the longer term when rates begin to climb.

To see how you could cut your mortgage by overpaying, try our online calculator.

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