Homeowners pay off £6.1bn in third quarter

Homeowners continued to accelerate the rate at which they are paying down their mortgages during the third quarter of the year.

Borrowers reduced their outstanding mortgage debt by 6.1 billion during the three months to the end of September, according to Bank of England figures released yesterday.

It was the tenth consecutive quarter during which the amount of money people paid down on their homes was more than they took out in equity release. The figure was also the biggest net injection of equity Britons have made into their homes since the first quarter of 2009.

Benjamin Williamson, a senior economist with the thinktank CEBR, estimated that home owners have paid nearly 50bn into their homes since the second half of 2008.

He said: "Ultimately, it will be to the long-term benefit of the housing market and the stability of the economy, although it will mean a shortage of finance for consumer spending in the short term."

Howard Archer, chief economist for IHS Global Insight, said the trend was set to continue. "House prices are currently falling anew, which is likely to further encourage a net injection of housing equity, in the near term at least," he noted.