From This is Money:
The Bank has reported that borrowers reduced the size of their mortgages by a combined £8.14bn in the first quarter of 2009. It is the fourth quarter in a row that equity withdrawal has been negative.
Homeowners’ focus on paying down their mortgages is in stark contrast to figures for the same period of last year, when people released £6.73bn from their properties to fund large purchases, although this was itself the lowest figure for six years.
Equity withdrawal enables homeowners to cash in on rising house prices by increasing their mortgages to convert some of the rise in the value of their home into cash. Falling house prices act as a disincentive for borrowers to remortgage.
House price falls of more than 20% since the market peaked in July 2007 also mean many people no longer have sufficient equity left in their property for them to withdraw.
The credit crunch has also led to banks and building societies tightening their lending criteria, making it more difficult a…