Britons inject 3.2 bln stg in housing equity in Q1 - BoE

inspector_monkfish

09:46 15Jul10 UK HOUSING EQUITY WITHDRAWAL OF -3.204 BLN STG IN Q1 - BANK OF ENGLAND

09:55 15Jul10 Britons inject 3.2 bln stg in housing equity in Q1 - BoE

LONDON, July 15 - Britons added 3.204 billion pounds ($4.87 billion) of equity to their homes in the first three months of this year, the equivalent of 1.3 percent of national income, the Bank of England said on Thursday.

That compares with an injection of 3.434 billion pounds in the last three months of 2009 and 4.995 billion in the third quarter.

Britons have injected equity into their homes for more than a year, reversing the trend of home equity withdrawal to fund other spending that has dominated the past decade.

Generali

You should've added this to Deflation Watch.

mbga9pgf

Thats a lot of money out of the real economy....

Generali

mbga9pgf wrote: »

Thats a lot of money out of the real economy....

Pretty helpful if you're a bank looking to recapitalize.

michaels

And as a bank if you have got really lucky it is those on the low margin tracker rates who have most spare income and are overpaying most as those mortgages are currently marked down to less than par value so any repayments are write backs.

Generali wrote: »

Pretty helpful if you're a bank looking to recapitalize.

Harry_Powell

So much for talk of inflation. A lot of people paying down their mortgages and building up their equity, taking advantage of the low rates. So much for talk of people going bust when rates go up. The only people missing out are renters sat waiting for prices to fall. It's a shame.

Thrugelmir

Harry_Powell wrote: »

So much for talk of inflation. A lot of people paying down their mortgages and building up their equity, taking advantage of the low rates. So much for talk of people going bust when rates go up. The only people missing out are renters sat waiting for prices to fall. It's a shame.

You need to put the repayment figure into context. As 2007 and 2008 equity was withdrawn.

In the two years prior to that they borrowed £87bn against the inflated value of their homes, often to spend on big-ticket items or to consolidate debt

At £12 billion a year of equity investment , it will take until 2017 to be back at the position we were at the end of 2006.

There's only one winner, those who lent the money.

Blacklight

Harry_Powell wrote: »

So much for talk of inflation. A lot of people paying down their mortgages and building up their equity, taking advantage of the low rates. So much for talk of people going bust when rates go up. The only people missing out are renters sat waiting for prices to fall. It's a shame.

I dunno, the STR gang that thought they'd cash in on a falling market are more guilty of trying to make a quick buck than genuine property developers or landlords that are just trying to run a business imo.

chucky

Thrugelmir wrote: »

You need to put the repayment figure into context. As 2007 and 2008 equity was withdrawn.

context = it equates to people paying back nearly 1% of the average mortgage per year if it's annualised. re-capitalise that and it shortens the mortgage term.

it's good news that people are shortening the term of their mortgage and also increasing equity.

increasing equity means that they will be able to re-finance (for those that need to) to get the better mortgage deals out there with a lower LTV.

Generali

Harry_Powell wrote: »

So much for talk of inflation. A lot of people paying down their mortgages and building up their equity, taking advantage of the low rates. So much for talk of people going bust when rates go up. The only people missing out are renters sat waiting for prices to fall. It's a shame.

The flip side of that coin is that if the best investment you can find with interest rates at 2-3% is paying down cheap debt then the economy is in a real mess!

chucky

Generali wrote: »

The flip side of that coin is that if the best investment you can find with interest rates at 2-3% is paying down cheap debt then the economy is in a real mess!

yes but no but yes, i'm not sure - i don't know how accurate what i'm going to say is in general but can only speak for myself.

i would only pay back debt if the interest i paid on it was higher than what i could get on my investments or i thought interest rates were on their way up.

those people that are repaying this debt would be those that have higher interest debt than their investment rate or people who anticipate rates increasing.