Equity Loan Numbers Drop
A few years ago, at the height of the property boom, many home owners believed that property prices could only ever increase and that they could withdraw equity from their home in the form of a secured loan, or a remortgage at any time they pleased, in the sure and certain knowledge that their home would carry on growing in value.
How times change. Since the credit crunch, a lack of finance for home owner loans and secured loans, combined with falling house prices, has led to a significant decline in the number of equity loans being taken out of property.
The latest figures from the Bank of England have revealed that, rather than taking additional loans out on their property, many home owners are actually repaying their secured loan debt, in order to give themselves a financial safety net for potentially difficult times in the future.
The figures have shown that over the course of the three months leading up to the end of September last year, UK home owners repaid around £6.1 billion worth of home owner loan and secured loan debt and have repaid a total of £49.7 billion on their loans since the second quarter of 2008.
A lack of finance for secured loans and much lower loan to value limits from lenders has also had a negative impact on people thinking about taking out an equity loan on their property and many home owners who took out large secured loans, at high loan to values prior to the credit crunch, may now actually be in a negative equity position, making additional loan repayments even more important.
With the immediate future of the UK economy looking particularly uncertain, more and more home owners are looking for the comfort zone of having a lot of equity tied up in their homes and it seems likely that the current trend of secured loan repayment will continue for some time.
