House price falls and the credit crunch have stopped Britons remortgaging to spend, as they focus more on paying off their mortgages.
Data from the Bank of England show individuals injected a net total of £5.7 billion into housing equity in the third quarter of 2008.
A year ago, households took £11.1 billion out of the value of their homes.
In the third quarter of 2007, housing equity withdrawal accounted for 4.8 per cent of household income, it now takes 2.4 per cent out of income – as people pay off home loans and stop using house prices to boost salaries.
Andrew Montlake, at 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.
“People are scared stiff of recession and rising unemployment and are now paying down their debts rather than adding to them.”
He added that falling house prices are also putting a number of people in the postion of negative equity.
“Of course, many people can't take money out of their homes even if they want to - any equity they had has either been wiped out altogether or seriously eroded by falling house prices,” Mr Montlake said.
“And even if they have got some equity left, there's no guarantee they'll be able to access it anyway given the stringent lending criteria lenders have now adopted."
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