The home equity cash fountain has finally dried up. During the second quarter of this year, UK home debtors stopped borrowing against their housing equity and paid off almost ₤3 billion of outstanding loans.
In the past, homeowners were taking out around 8 percent of GDP. With house prices crashing and home equity evaporating, banks have severely cut back lending to home owners.
Ultimately, this is good news. The UK household sector has taken the first small step towards reducing the crushing pile of debt accumulated over the last ten or so years.