Borrowers increased their mortgage debt by an average of 31% through remortgaging in 2006, research from LMS reveals.
The Council of Mortgage Lenders says that some 280,000 home borrowers remortgaged in Q4 2006, representing an average debt increase of 34,000 per borrower.
This current LMS research indicates that these borrowers collectively increased their debt by over 9.5bn.
The overwhelming majority of borrowers are ploughing this equity back into the property market by either undertaking home improvements or helping children or grandchildren get on the property ladder themselves.
In Wales, borrowing has increased the most at 53%, showing that in the last full quarter remortgaging borrowers have significantly increased their mortgage burden by an average of 32,468.
Dominic Toller, director of marketing and new business at LMS, says: This remortgaging data demonstrates that borrowers are releasing large amounts of equity from their homes in ever-increasing numbers.
“Some regions have seen rates of borrowing double in the last quarter of 2006. This increase represents something approaching a 10bn cash injection but not in the shops.
Most remortgaging property owners are re-investing this equity in their homes or helping younger members of the family with deposits.
Given this increase in borrowing it could be expected that people are overstretching themselves with 5 x or 6 x income mortgages. However, this LMS research shows that current income multiple borrowing levels are in keeping with historic trends at just short of 3 x income when you look at the national picture.