UK housing equity withdrawal -£8.5bn

HEW as a percentage of post-tax income was -3.2% in 2011 Q4, unchanged from the percentage for 2011 Q3.

The negative figures indicate a continued injection of housing equity by households overall, with the net flow of lending secured on dwellings remaining weaker than their investment in housing.  The flow of secured lending remained positive.

The decline in HEW – and move to injections of housing equity - since the start of the financial crisis has not been associated with an increase in repayments of secured debt. Gross secured loan repayments have fallen since that time, which has reflected both lower housing market activity and a reduction in remortgaging.

An article in the 2011 Q2 Quarterly Bulletin explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past.

Steve Wilkie, of equity release specialists, Responsible Equity Release comments:

"The relentless deleveraging of mortgage debt continued during the fourth quarter. Most people aren't actively overpaying their mortgages, as often the money isn't there. It's simply that many households have no option but to pay down their debt.

"If you have no, or very little equity, all you can do is meet your monthly mortgage payments. Remortgaging is not an option. Inevitably, over time that brings downs a household's mortgage debt level.

"In the nineties and early noughties, remortgaging every last penny out of your home was the norm for many people. After all, they could rely on house prices bailing them out. Those days are now long gone.

"The forced conservatism many people find themselves in now is at least enabling them to rebuild the equity in their homes. In the long-term, that can only be a positive, for both their personal finances and the wider economy."