MORTGAGES: Britain Becoming A Fool's Paradise

12.00.00am UTC (GMT +0000) Thu 18th Sep 2003

Vincent Cable MP

Today's Council of Mortgage Lenders monthly statistics shows a record level £11.5bn of mortgage lending in August. Levels of remortgaging for equity release advanced reached £9.4bn in August. Vincent Cable MP, Liberal Democrat Shadow DTI Secretary, said: "Britain is clearly sitting on a debt time bomb."

"With the Bank of England indicating that interest rates will rise in the near future, the warnings of unaffordable debt are going unheeded."

"Low interest rates and high house prices have pushed mortgage lending to unsustainable levels. The consequences of increased rates could be damaging for both heavily mortgaged homeowners and heavily indebted families."

"People may soon find that they are living in a fool's paradise. Many feel a false sense of security in borrowing at current interest rate levels which may not be justified. Debts eventually have to be repaid and future incomes cannot be guaranteed."

ENDS

Notes to Editors:

Council of Mortgage Lenders said lending for house purchase totalled £11.5 billion in August (the highest figure since CML monthly records began), accounting for 48% of total lending. This compares with £11.0 billion (45%) in July, and £10.8 billion (52%) in August last year. The proportion of lending for house purchase was just 35% in April and May this year.

Remortgaging was still strong, however, at £9.4 billion (40% of the total). This was lower than July's £10.5 billion (43%), but up on last August's £8.2 billion (40%).