Borrowers break repayment record

Homeowners repaid a record amount of their mortgages in the first three months of 2009, figures from the Bank of England have shown.

An estimated £8.1bn was repaid, according to Bank of England statistics, taking the total to £76bn for the year to the end of March.

Since early last year, falling house prices and strict mortgage rationing halted top-up borrowing on mortgages. Prior to that, homeowners had borrowed more than £300bn extra against the rising value of their homes since 2000.

Ashley Brown, director of independent mortgage broker Moneysprite, said: “The hedonistic days of living the good life and borrowing against the value of your property are a distant memory.

“Homeowners now recognise that this is the time to batten down the hatches and reduce their debt rather than live on credit. From a mortgage perspective, the more equity people have in their homes the more competitive the mortgage rate they will be able to secure. Also, people in negative equity may gradually be moving out of it.”