In seasonally adjusted terms, the Bank’s measure of housing equity withdrawal in 2012 Q1 was -£8.8bn, £0.3bn lower than the figure for 2011 Q4. HEW as a percentage of post-tax income was -3.3% in 2012 Q1, compared with the figure for 2011 Q4 of -3.2%.
The negative figures indicate a continued injection of housing equity by households overall, with the net flow of lending secured on dwellings remaining weaker than their investment in housing. The flow of secured lending remained positive.
The decline in HEW – and move to injections of housing equity - since the start of the financial crisis has not been associated with an increase in repayments of secured debt.
Gross secured loan repayments have fallen since that time, which has reflected both lower housing market activity and a reduction in remortgaging. An article in the 2011 Q2 Quarterly Bulletin explains that the fall in housing equity withdrawal since the financial crisis is likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past
Housing equity withdrawal (HEW) is classed as the balance of effects on the stock of housing equity from:
- Changes in the stock of secured lending when households take out or repay debt.
- Changes in the stock of housing wealth, e.g. when new properties are built or improvements are made to existing properties.
The stock of housing equity can also change as a result of revaluations of the stock of housing wealth due to changes in house prices, but this is not included in HEW.
Steve Wilkie, director, equity release specialist Responsible Equity Release, said:
"These latest figures reconfirm that the nation's properties are no longer the nation's ATM. The gradual but consistent decline in equity withdrawal from the UK's property stock mirrors the gradual but consistent decline of the UK property market. The lack of transactions in the market is sending equity withdrawal into ever more negative territory.
"But this is no bad thing. Money going into the property market will be to its benefit in the long term. Low remortgage levels, due to both lender and consumer caution, are also a factor. While mature households still have significant equity, and are able to draw on it, many younger households cannot as there is simply not enough of it there. Many households have no option to pay down their mortgages.
"In the nineties and early noughties, households had an extra salary in the form of ever-rising property prices. The days of long-haul holidays, new cars and extravagant lifestyles are, for many people, long-gone. Now it's payback time."
