Homeowners borrowed an extra half a billion pounds against the value of their property in the first half of the year, new figures showed yesterday.
This was more than double the total borrowed in the same period a year ago and will add to fears that Britons are racking up too much debt.
The Council of Mortgage Lenders (CML) said 11,700 new equity-release mortgages, where existing borrowers add to their debt, were taken out between January and June for £498m, almost £3m a day. This compared with 5,900 loans for £225m in the first half of 2002, or a rise of 121 per cent.
Michael Coogan, CML's director general, said: "Older people are increasingly in a situation where most of their wealth is tied up in their home. Equity release can make a lot of sense ... if they do not wish to move or trade down."
According to the CML, the number of outstanding equity release loans is now 53,000, with a total value of £2.3bn. This represents less than 0.5 per cent of the total residential mortgage business and Mr Coogan said that it was a still a growth market. Industry estimates suggest a realistic potential market size of between £50bn and £100bn.
Equity release is one device by which elderly homeowners can shield themselves from inheritance tax. These allow people to sell a part of their homes to the lender, reducing their estate's valuebelow the £255,000 threshold. The Consumers' Association says the number of people caught by inheritance tax has risen by more than 50 per cent in the last five years.Reuse content