Wednesday, 2 April 2008
Mortgage equity withdrawal is slowing
(click on the chart for a sharper image)
The UK spendfest is slowing down. In the fourth quarter of 2007, mortgage equity withdrawal slowed sharply to 3.2 percent of post-tax income. It is now at its lowest level since 2005.
The housing crash is doing all the work. With prices now falling, banks are waking up to the fact that housing equity is about to disappear. They have begun to cut back on secured lending.
The sudden slowdown in housing equity withdrawal will definitely put a brake on consumer expenditure. Although the UK is not yet in a recession, the prospect of a slowdown in growth is drawing closer.