Mortgage equity loans plummet
The amount of money raised through mortgage equity withdrawal (MEW) has fallen, according to the Bank of England.
Falling house prices and tight lending criteria have caused the amount of cash borrowed through MEW to tumble by more than 50% over the past year.
The Bank of England’s figures reveal the amount of money borrowed against increased home values has fallen to £5.04bn between January and April 2008.
The amount of cash raised in this way has fallen 64% from £13.89bn during the same period in 2007.
The fall in borrowing in this area is likely to have a major impact on consumer spending in the UK as consumers struggling with high food, fuel and mortgage costs will not be able to access any extra borrowing.
The UK has borrowed a total of £311bn through MEW since 2000, but falling house prices are likely to put an end to this type of borrowing for some time to come.
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