Statements by the Bank of England disclosed that the amount of equity release mortgages taken by people had considerably plummeted notwithstanding the rise in the number of mortgages. Borrowing against properties that were not plowed back into the property market i.e. mortgage equity withdrawal had gone downhill, following the slump in the housing market along with reduced household expenditures.
Figures revealed by the Bank showed that mortgage equity withdrawals slipped sharply to around £6.9 billion in the last quarter of 2004 against £11.3 billion three months before and £16.8 billion in 2003. However, February recorded a good number of fresh home loan applications in five months with about 85,000 mortgage approvals, along with the highest rise of £7.3 billion in the number of loans secured against properties since September.
According to chief economist from Global Insight, Howard Archer, the decline of the property market with higher interest rates had “markedly reduced an individual's scope and desire for mortgage equity withdrawal.”
The persistent fall in mortgage equity withdrawals has further led to anticipations that the Bank of England will be compelled to stall interest rates for the remaining part of the year.
Posted
on : Fri, 01 Apr 2005 00:00 GMT | Mortgages News
By : Chris Rowe
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