Homeowners reducing debt burden at record rate

Net mortgage payments reached record levels in the final quarter of 2008, according to The Times, as homeowners looked to reduce their debt burden in the midst of a recession.

Borrowers reduced their collective mortgage debt by £8bn in the final three months of last year, according to Bank of England figures. It was the third consecutive quarter in which homeowners put more money towards their mortgage debt than they took out in equity withdrawals.

It was also the biggest net `equity injection` (paying-off of mortgage debt) since the Bank of England`s records began in 1970.

Interest rates on mortgages have come down significantly in recent months, following a series of sharp base rate cuts. Industry experts have said that economic uncertainty has prompted many homeowners on tracker and variable-rate mortgages to put the money they have saved back towards their mortgage debt, effectively paying the debt off more quickly and reducing the threat of negative equity.

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