Britain's worried homeowners are rushing to repay their mortgage debts as worries about sliding house prices and the end of cheap credit put the dampeners on household spending plans, according to the latest official figures.

The Bank of England revealed today that homeowners ploughed an estimated £5.7 billion into housing equity in the third quarter between July and September, as concerned Britons reduced their debts rather than splashing out on luxury holidays and new cars.

It was the largest such quarterly housing equity injection since the series began in 1970 and follows a cash mortgage equity infusion of £2 billion in the previous three-month period. The change underscores the end of a decade-long borrowing binge driven by soaring property prices.

The Bank said today that for a second successive quarter consumers chose to increase the amount of equity in their homes by cutting their mortgage loans.

It is only the second time in almost ten years that consumers have injected cash into their mortgage debt rather than increase their borrowing levels.

Andrew Montlake, partner at independent mortgage broker Cobalt Capital, said: "Not so long ago, an Englishman's house wasn't just his castle, it was his cash machine, too. This, very clearly, is no longer the case."

Sliding house prices throughout this year and ominous forecasts of further declines have made it less attractive, and less possible, for property owners to borrow against their higher value of their house or flat.

It stands in contrast with figures from the same period last year, when homeowners withdrew more than £11.1 billion in housing equity, equivalent to 4.8 per cent of after-tax incomes.

According to today's figures, mortgage equity withdrawal has slumped to a negative 2.4 per cent on household incomes.

Economists said the figures represented further evidence that UK consumers were preparing for a sustained period of retrenchment. They said this would a major factor contributing to a sharp contraction in economic growth next year.

Howard Archer, chief UK and European economist at Global Insight, said: "Sharply falling house prices have made housing equity withdrawal increasingly unattractive, while very tight credit conditions have made it more difficult to carry out the process as well as to take out new mortgages.

"In addition, increasingly lower savings rates have made it relatively more attractive for many people to use any spare funds that they have to reduce their mortgages."

Today's figures will make bleak reading for Britain's embattled retailers, who will be bound to feel the effects of consumers tightening their purse strings.

Global Insight forecasts that the economy will contract by 2.7 per cent next year, while consumer spending will drop by 2 per cent.

House prices nationwide fell by 8.7 per cent this year and will fall further still in 2009, according to Hometrack, a leading property researcher, today.

Hometrack, which found that property prices in London fell a sharp 1 per cent in December alone, earlier predicted that prices will fall by 10 per cent over the next 12 months.

Its forecast echoes similar views from Rightmove, the property website, and the Royal Institution of Chartered Surveyors.

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