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Remortgages boost savings

A surge in individual savings of 130m has been put down to remortgagers who failed to spend the cash on home improvements or holidays.

Building Societies Association figures show that net savings into society accounts rose to 998m in December 2004 from 867m in December 2003.

BSA members put this down to an influx of funds from people who have withdrawn equity from their properties for renovations and holidays but then failed to use that cash.

The rise in property prices had led to an increase in the number of people who have released money from their properties and then used the cash for luxuries or home improvements.

The start of a fall in house prices could have prompted an increase in remortgaging as people look to make the most of their property value.

The BSA figures show that gross advances amounted to 3.1bn in December 2004, down from 3.9bn in December 2003. Approvals fell to 2.6bn in December from 3.4bn in 2003.

Director general Adrian Coles attributed the increase in savings inflows to attractive rates and an uncertain outlook for equities.

External affairs manager Rachel Blackmore says: “Remortgaging like this is a once or twice in a lifetime thing. The general consensus is that people have taken equity out of the home and then not used it so they are putting all or some of it into their savings account.”

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The Pensions Policy Institute website at www.pensions policyinstitute.org.uk is a mine of useful information and not just for people interested in high-level pension policy issues.

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