Remortgage on the rise to pay off other debts

25 June 2007
Britons are increasingly borrowing against their homes, despite four rises in the Bank of England’s base rate since last August and the prospect of at least one more rise in the coming months, according to Moneyextra.com.

There has been a 7.19% rise in the average remortgage, which is now £122,5411. The increase reflects increasing house prices over recent years, but it also indicates that many could be using the equity tied up in their house to cover other, higher interest debts.

Moneyextra’s Senior Editor, Robin Amlôt, said “Recent reports from the retail sector, including disappointing sales growth figures from both Tesco and Sainsbury, would suggest that we’re not spending this money on goods and services but using it to reduce other debts.

“It seems many people are opting to switch expensive credit card debt and overdrafts into long term low interest rate mortgage debt. Of course, this does mean they could be paying far more interest in the long run, but it is one way of reducing immediately monthly outgoings.”

Elsewhere in the housing market, first time buyers are still the main focus of pressure, with the average property price rising to £228,754 while the average first time buyer mortgage has crawled to just £139,935.

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