UK homeowners are rushing to pay off their mortgage debt, as the fear of negative equity grows.
Mortgage debtors paid back a total of £5.7 billion in the third quarter of 2008 alone. This is in sharp contrast to the same period in 2007, during which a net total of £11 billion of equity was withdrawn on mortgages.
This trend of overpayment looks set to continue as house prices continue to fall. Many homeowners are either worried by the possibility of negative equity, or concerned that their financial situation will suffer further during 2009. As such, many are making overpayments now in order to reduce their monthly outgoings.
A total of nearly £7 billion was put back into the UK housing market by mortgage debtors during the second and third quarters of this year. This demonstrates the end, in most cases and at least for now, of equity release as a means of raising finance.