Borrowers cut mortgage debt by record rate

Borrowers reduced their outstanding mortgage debt by £7bn during the three months to the end of December, the Bank of England said.

It was the 11th consecutive quarter during which the amount of money people unlocked from their homes was negative and the highest net injection of housing equity since records began in 1970.

The recent trend among homeowners to pay down their mortgages contrasts with their behaviour during the housing boom.

Homeowners have now collectively injected £57.4bn into their housing equity since the trend began in the second quarter of 2008.

The rate at which people are reducing their mortgages accelerated for the fourth quarter in a row during the three months to the end of December, with the latest figure up on the £6.6bn injected in the third quarter of the year.

Howard Archer, chief UK and European economist at IHS Global Insight, said the figures highlighted “the strong desire and perceived need” of many people to improve their personal balance sheets given high debt levels and serious concerns and uncertainties over the economic situation”.

He added: “Extremely low savings rates have made it much more attractive for many people to use any spare funds that they have to reduce their mortgages.”