Figures from the Bank of England (BoE) show that homeowners paid off more of their mortgage borrowings last year than they had done in any other single year.

In 2010, mortgage borrowers paid back more than £24bn to lenders, the highest since records began in 1970. They returned £7bn in just the final three months of the year, a record amount during any quarter since the Bank started collecting the figures.

However, the figures are slightly skewed because they also include money paid as deposits by homebuyers. This is because lenders demanding higher deposits and rationing home loans would also increase the financial stake that homeowners have in their properties.

Part of the problem of the credit crunch was that, in the boom, people used extra mortgage borrowing to cover other spending. This meant that they were risking their home to afford an extra car, expensive holiday or other extravagant spending.

From July 1998 to March 2008 homeowners borrowed an extra £328bn against the rising value of their homes. This is known as housing equity withdrawal. Now the opposite is happening, as families try to reduce their debts and lenders demand higher mortgage deposits.

Borrowers have also taken advantage of low interest rates to pay back more of their home loans while mortgage costs are low.

There has been an injection of housing equity for 11 quarters in a row, the figures show.

Homeowners have now collectively injected £57.4bn into their housing equity since the second quarter of 2008, when the trend switched from withdrawal.

These figures are not a surprise for market analysts. Extremely low savings rates have made it much more attractive for many people to use any spare funds that they have to reduce their mortgages.

The latest figures show that households spent the equivalent of 2.7% of their post-tax income on reducing their mortgages. On the other hand, during the boom times, equity withdrawal was providing homeowners with the equivalent of a 9% post-tax boost to their incomes.

Mortgage rationing through demands for higher deposits has contributed to the trend in equity injection. However, the availability of mortgages has picked up in recent months.

Figures from the financial information service Moneyfacts show that in March there was an increase in availability of home loans at all loan-to-value levels. For example, there were 228 mortgages available at the start of April for those offering a deposit of 10% of the value of a home, compared with 202 a month earlier.

At long last, a Bank of England (BoE) survey has offered a glimpse of hope to the UK housing market that means a hint of optimism is creeping through London with the first signs of spring.

Mortgage providers expect to grant more loans in the next three months and Lenders were at their most positive in two years about the prospects for mortgage availability. Analysts believe this is because of their market share targets and the improving cost and availability of their funds.

In good news for first time buyers, those polled in the central bank’s quarterly survey were also more willing to lend to those with a small deposit, reporting that they have increased access to loans for buyers with deposits of less than 25%.

Meanwhile, Nationwide reported that average house prices rose for a second month in March, up 0.5% month-on month to £164,751.

However, the picture was marred by the BoE’s survey revealing an unexpected jump in the number of households defaulting on their mortgage payments, the first rise reported in almost two years.

Lenders expected the default rate to climb further still amid concerns over the impact of possible higher interest rates. The BoE may decide that increasing interest rates is necessary to combat increasing inflation but this will also increase the monthly repayments for many households beyond the level at which they can cope.

Analysts have suggested that an increase in remortgaging recently was because of households trying to shelter themselves from an expected increase in interest rates. Aside from remortgaging deals, lenders saw a marked decline in demand for loans to make house purchases.

Lenders also thought house prices would fall this quarter, but only a small balance thought mortgage demand would drop further.The unexpected increase in default rates on secured lending in the first quarter may temper Bank’s enthusiasm for lending more, and even if they are willing to lend more, the survey showed households’ demand for secured lending for house purchases fell sharply again.

There is general agreement in the market that, although there is some good news from this latest survey, the big picture still shows the UK undergoing a painful transition from a world in which the low cost and absolute availability of mortgages could not last to something more sustainable.