According to research by LMS, remortgage debt increased by 31 per cent in Q4 2006, with an average debt hike of £34,000 per borrower.
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However, it believed fears that clients were overstretching themselves were unfounded as the average income to mortgage debt ratio was still under three times.
Dominic Toller, director of marketing and new business at LMS, said: “This remortgaging data demonstrates that borrowers are releasing large amounts of equity from their homes in ever-increasing numbers. Given this increase in borrowing, it could be expected that people are overstretching themselves with five or six times income mortgages. However, current income multiples are in keeping with historic trends at just short of three times income when you look at the national picture.”
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However, John Mawdsley, director at The Mortgage Partnership, believed income multiples were outdated for indicating affordability.
“Income multiples are a little old hat when it comes to affordability as different people have different circumstances which impact on the way they live their lives. A broker knows his client and that he can’t recommend a product which the client can’t afford.”
