Homeowners have been cashing in on rising property prices by using their homes as backing for a record level of loans, figures have revealed.

It shows the consumer has gone ballistic

John Butler, economist at HSBC

The Bank of England said on Friday that £10.6bn had been withdrawn in the quarter from April to June, the highest quarterly figure on record.

Mortgage equity withdrawal, as a method of financing home improvement or even holidays, has become increasingly popular with homeowners who are keen to make use of high property prices.

	:	UK property market
The house price boom

As house prices have risen nationwide, homeowners have been effectively unlocking that rise - and spending the additional money to finance other purchases.

Equity withdrawal

Mortgage equity withdrawal has become increasingly popular over the last couple of years, as property values have risen.

In the last quarter of 1999, £715mn was withdrawn.

In the three months to the end of December 2000 that figure had increased to £3.5bn, increasing to £8.3bn in the first quarter of 2002.

Debt experts have become increasingly concerned that homeowners could face a cash-crunch in the future.

John Butler, economist at HSBC, said: "It shows the consumer has gone ballistic. Talk of a consumer slowdown is premature. People are using house price rises to finance their spending."

"It raises concerns about the vulnerability of the household to any future shocks such as rising unemployment in the face of global stagnation," he added.