Alarm over equity release rise

FRESH evidence of an insatiable appetite for equity release schemes emerged today from the British Bankers' Association.

In a report likely to sound more alarm bells over pensioners getting ripped off, the group said 35% more mortgage equity withdrawal loans were signed in July than a year ago. By value, the figure was 40% higher.

MEW - where homeowners unlock cash tied up in their properties to spend on major purchases such as a holiday, a new car or kitchen - have surged in popularity as an easy and low-cost form of borrowing.

However, many of the borrowers are elderly people wanting to supplement their pensions, and groups such as the National Consumer Council and the Consumers' Association fear that they are not being given adequate advice.

Overall net mortgage lending rose by £5.5bn in July, up 11% on June's figures. The number of house-purchase loan approvals was 5% higher than a year ago, indicating the housing market is still buoyant.

BBA executive director Roger Brown said: 'A notable feature of the approvals figures was the scale of the demand for loans for equity withdrawal.'

Credit card borrowing also picked up, rising by £396m against £199m the previous month.