According to The Guardian’s News; Bank of England figures show homeowners put £10.4bn of equity into their properties – down £2bn on previous quarter.
Britons were less inclined to use savings to reduce mortgage debt in the third quarter of 2013, Bank of England figures showed on Monday, adding to signs of improving consumer confidence as house prices rise and the jobs market recovers.
Homeowners put £10.4bn of equity into their homes in the quarter, the data showed – more than £2bn less than in the previous quarter and the lowest since the fourth quarter of 2009.
Britons have paid down their mortgages on a net basis for the past four years, reversing the trend towards higher debt levels that dominated from late 1999 until the financial crisis.
Borrowing against the rising value of property was a key driver of the consumer boom of the last decade, and while the Bank might welcome a return of that “feelgood” factor, it will be wary of a recovery that is heavily reliant on household spending and cheap credit.
Data earlier this month showed households saved just 5.4% of their disposable income in the third quarter, down from 6.2% in the second. Household spending, meanwhile, rose an annual 2.5%, faster than growth in the economy overall.
Keeping house prices in check without crimping growth in the rest of the economy is shaping up to be the Bank’s biggest challenge in 2014.
While inflation in the broader economy has come within a whisker of the Bank’s 2% target, house prices are rising six times as fast in the capital and almost four times as fast nationwide.
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