Homeowners unlocking £12billion in equity from homes
The rate at which people unlock money from their homes picked up during the summer months, figures have revealed.
Homeowners released an estimated £11.8 billion in the third quarter of the year, the Bank of England said.
The figure is up £800 million from the revised estimate of £11 billion for the three months to June 2006.
Despite reversing 2006's downward trend, the total is still considerably lower than a high of £17.14 billion reached during the final three months of 2003.
But it is up on comparable figures for the same period last year, when the total recorded was £9.1 billion.
Mortgage equity withdrawal amounted to 5.4 per cent of post-tax income in the third quarter of 2006, the Bank of England said.
This is up from 5.1 per cent in the second quarter, but down on the figure of 5.7 per cent reached in the first three months of the year.
Mortgage equity withdrawal for the first three quarters of 2006 totalled £35 million, compared to £25.2 million in the corresponding period in 2005.
Howard Archer, chief UK and European economist at Global Insight, said: "The significant overall pick-up in mortgage equity withdrawal in the first three quarters of this year reflects increased confidence in the housing market, the overall marked firming in house prices between mid 2005 and mid-2006, and relatively low interest rates."
He added: "It is also clear that a number of people have switched to secured debt from unsecured to help finance their spending, due to the lower borrowing costs. Significantly, unsecured borrowing has been markedly weaker in recent months compared to past norms.
"It should also be noted that mortgage equity withdrawal is substantially used for other purposes than funding consumer spending, such as reducing debts, investing in other financial assets and topping up pensions.
"For example, a significant proportion of mortgage equity withdrawal may be due to older people whose children have left home trading down and using the proceeds to supplement their pensions."
