Falling prices have removed the incentive to expand mortgages
Homeowners repaid a record amount of their mortgages in the first three months of 2009, figures have shown.
An estimated £8.1bn was repaid, according to Bank of England statistics, taking the total to £23bn for the year to the end of March.
From early last year, falling house prices and strict mortgage rationing halted top-up borrowing on mortgages.
Prior to that, home owners had borrowed more than £300bn extra against the rising value of their homes since 2000.
"This is not a surprise given the fall in house prices over the period, and will have contributed in no small way to the weakness in High Street spending," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).
"It is improbable that housing capital, in the near term, will be viewed as a source of wealth that can be drawn down by home owners to supplement their income," he added.
The Bank of England explained that the switch from mortgage equity withdrawal, to the expansion of equity held by homeowners, did not just reflect conscious decisions by homeowners to pay off some of their loans.
It was also affected by lenders requiring larger deposits when lending to people buying homes, thus producing a greater injection of equity into the property.
"The hedonistic days of living the good life and borrowing against the value of your property are a distant memory," said Ashley Brown of mortgage broker Moneysprite.
"Homeowners now recognise that this is the time to batten down the hatches and reduce their debt rather than live on credit," he added.
Separate figures from the financial information service Moneyfacts have revealed a further slight relaxation in lending by banks and building societies in the past month.
At the beginning of July there were 119 mortgage deals available which asked for only a 10% deposit.
Although far fewer than a year ago, this is up from 101 such deals at the start of last month.
"It is encouraging to see that products available with 90% loan-to-values are creeping up," said Darren Cook of Moneyfacts.
"The increase is not enough to signal that mortgage providers are returning to healthy or normal appetites to lend.
"But [it is] more of an indication that they are re-expanding their product ranges, after reducing them to the bare minimum when the future prospects and attitudes towards risk looked extremely bleak," he added.
At the beginning of May 2008, mortgages requiring just a 10% down-payment made up nearly 40% of all mortgaged deals on offer.
But there was a dramatic tightening of lending criteria as the year went on, as lenders sought to ration their available funds to only the most credit worthy customers.
Now, 10% deposit mortgages make up just 7.5% of available home loans, with 65% of deals now requiring a deposit of at least 25%.