Homeowners in the UK are cautious about withdrawing equity on their properties, according to quarterly equity withdrawal figures published by the Bank of England, the BBC reported on Monday.
Housing equity withdrawal stayed negative in the third quarter of 2013 and the Bank’s data indicates that British homeowners are not currently relying on increasing house prices to use equity from their homes for other purchases. This could be partly because of expectations that the current historically low rates on interest and mortgage may rise, according to the BBC.
Bank of England figures show that equity of GBP10.4bn was added into UK homes, as sales were lower compared with the housing boom in the early part of the 21st century, which saw a high rate of housing equity withdrawals. There have been rises in house prices in several areas of the UK, but some regions have only recently experienced property price increases.
The level of equity injected in the third quarter of 2013 is lower compared to the GBP12.5bn recorded in the second quarter of 2013. However, the third quarter figure was reportedly similar to the amount recorded by the Bank of England during the same three months in 2012. The BBC added that the Bank believes that the expiry of some mortgages and the regular injection of equity in recent years was a reflection of lower house sales, rather than owners making an active effort to pay their mortgages off earlier.
During the last decade, when the UK housing market was booming, equity withdrawal was high as house buyers were taking on further debt in order to move into a bigger property, or borrowing money against the rising value of their property to buy items such as new cars. This practice was said to have come to a halt when the financial crisis happened in 2008.