It would seem that British homeowners are taking full advantage of the prevailing low interest rate and paying record amounts off their mortgage debt. According to the Bank of England, in the first quarter of 2009, we paid off a staggering £8.1 billion off our mortgages, a record since records began around 40 years ago. It would seem that the main reason for this is to take full advantage of the 0.5% interest rate currently in place, which is in itself a historic low for our nation.

Are attitudes changing to the way we perceive debt? Well, looking at our government one would suspect not with a current public deficit of around £17.5 billion up from £10.6 billion in May 2008. However, there are signs that the citizens of this country have learnt a lesson and are playing it far more cautiously. With the advent of the credit crunch and subsequent fall of many assets classes, such as property, perhaps we have come to the realisation that we shouldn’t spend what we don’t have.

However, one of the consequences of declining property prices, which is estimated at around 15%, is that people are beginning to have less equity in their homes. When you couple this with a changing attitude and perception to debt one can see that products such as equity release may be in for a hard time. Equity release has been in decline for the fourth consecutive quarter.  There has also been a downward long-term trend with this product, which has been declining since its peak in late 2003.

It would seem that although individuals have less disposable income many are choosing not to indulge by taking further equity out from their homes to maintain their current lifestyle.