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Increased equity withdrawal in UK mortgage market

Date: Wed, 05 Oct 2005

The amount of mortgage equity withdrawal in the UK market has increased to £8.7 billion during the second quarter of 2005.

Figures from the Bank of England show that people are taken money out of their property and not reinvesting in homes – it is the first time equity withdrawal has increased since autumn 2003.

"Mortgage equity withdrawal picked up in the second quarter, having slowed markedly in the second half of last year and the first quarter of this year," said Howard Archer, chief UK economist at consultancy firm Global Insight.

"Even so, at 4.2 per cent of post-tax income in the second quarter, mortgage equity withdrawal was still less than half of the nine per cent peak level seen in the fourth quarter of 2003," he added.

The fall in mortgage equity withdrawal over the past year is believed to have had a significant effect on consumer spending and it is hoped that this recent upsurge will boost high-street sales.


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