Mortgage equity withdrawal falls (UK)

The figures indicate that the downward trend in borrowing against house values - first seen in 2004 in response to rising interest rates - has resumed.

UK homeowners have now borrowed £207bn this way since the start of 2000.

However, the slowdown in the last two years has been dramatic.

Homeowners have been reining in their desire to spend in the face of higher borrowing costs and an accompanying sharp drop in house price inflation.

Downward trend

Withdrawal peaked in the final three months of 2003 at £17.6bn

The result during that quarter was a 9% boost to the UK population's take-home income, outstripping even the boost to incomes seen during the house price boom of the late 1980s.

But aside from a rise in the second quarter of this year, mortgage equity withdrawal has been falling steadily since the start of 2004.

Currently it adds just 4% to the spending power of UK households.

The decline of the past two years has been a significant factor in the slowdown over the same period in the growth of retail sales. New car demand has been particularly hard hit.

Figures from the Society of Motor Manufacturers and Traders, to be published later this week, are expected to confirm that new car sales fell by 5% this year - the second straight year of decline.