The British have ceased to borrow against the value of their homes for the first time since the 1990s, preferring instead to pay back some of their mortgage debts.

This new trend, which spells more bad news for the high street and highlights the impact of the recent fall in property prices, emerges from Bank of England equity withdrawal figures published today.

These reveal that households reduced their mortgages by £2.8 billion between April and June this year. This was the first net addition of housing equity since the fourth quarter of 1998 and the biggest since the series began in 1970.

This year's move is in contrast with the same period in 2007, when house prices were close to their peak and more than £10 billion of equity was withdrawn to finance spending on cars, holidays and home improvements.

By the first quarter of 2008, equity withdrawal was decelerating rapidly but households nevertheless borrowed £5.2 billion.

Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors, said: "Equity withdrawal turning negative for the first time since the late 1990s sends a clear message that the downturn in the housing market is reducing access to equity built up in property over recent years.

"This has contributed to consumer spending falling in the second quarter and we expect this trend to continue for some time to come. Against an increasingly gloomy economic backdrop, there is a strong case for the Bank of England to take decisive action and cut interest rates at next week's meeting."

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