(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.
3 comments:
Spammers will be zapped.
The real reason credit spending is rising is because many, many people have spent the last few years spending instead of saving. Now that house prices have stopped going up 10% per year these people find they are living beyond their means. It will end in tears.
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