Britons re-mortgaging to pay off debts

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by Kay Murchie

Recent reports relating the retail sector show disappointing sales growth figures from Sainsbury and Tesco, this implies that Britons are not spending money on goods but using it to pay off or reduce their debts. It is becoming evident that many are choosing to switch credit card debts and overdraft into low interest rate mortgage debt. This is a way of reducing monthly outgoings but does signify that they could be paying far more interest over the long term.

Since August 2006, we have had 4 base rate rises and with the possibility of another on the way, the average remortgage is now £122,541, a rise of 7.19% on 12 months ago. This rise could be an indication of homeowners using equity in their house to reduce or pay off debts

The pressure of the housing market is still focused on first time buyers. The average value of property being sought by first time buyers rose by 8.91% to £183,317 but the average first time buyer mortgage rose only 2.99% to £139,935. During the same period, average house prices rose by 6.05% with the average house price at £228,754 and the average mortgage rose to £139,095, up just 2.95%.