Brits paying off mortgages rather than borrowing to survive recession

The British Bankers Association has recently stated that consumers are paying back money on their mortgages, rather than borrowing more, in order to get through the recession. The peak amount of borrowing was taking place in 2007 when the crash first occurred and since that time people payback more money in general. In the last month the amount that people were paying back was greater than borrowing by around £350 million.

It is not just the case that people are paying back money on their mortgages, and it was also shown by the survey that customers were also paying back their credit card debt. The statistics director for the association recently stated, “People are behaving more conservatively, because of the economic environment being rather weak. Trading positions have been poor, so customers are reluctant to borrow more, and the same is true the companies.”

The number of loans approved so far this year has generally been lower, however net lending has been up by just over 0.5 percent. Since the start of the year round is 30,000 mortgages have been green stamps, and this is a significant decline on the same figure that was seen during the boom times between 2006 and 2007.

Martin Stewart, who works at the mortgage broker London Money has recently commented, “This year the number of house purchases has been very low, and this is not just due to poor market conditions. The Olympic Games has also meant that people are less interested in buying homes, as there are simply more distractions.

“Many people expected house buying activity to go up this year, but in actual fact it is gone down. This is something that has surprised many people in the industry. It is especially concerning given the various initiatives that have been launched by the government in order to improve the mortgage situation.”

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