Not that you made that distinction initially, but even taking that into account, not everybody's mortgage has gone down - half of mortgages are on fixed deals, and if they're coming off a fixed deal with bugger all equity in the house they'll probably find they could pay more than before. Also take into account that savings income has plummeted and share dividends have been slashed - anyone depending on income such as that will be having problems. And perhaps, just perhaps people are looking at the unemployment rates rising and thinking "s***, that could be me" and deciding to actually pay off debt instead of spending more.