Most equity withdrawal is not the result of consumers taking on more debt to fund unaffordable lifestyles, the Council of Mortgage Lenders says.
Instead, most withdrawal is the result of trading down or last time sales when people exit owner-occupied property or properties are sold on death.
The conclusion comes following research into figures obtained from the Survey of English Housing covering the period 1998 – 2003.
These figures show two-thirds of equity withdrawal was the result of last time sales and trading down.
Some 25% was attributable to remortgaging, with the remaining 13% linked to people moving house borrowing additional money in order to finance the move.
Those remortgaging did, however, account for the greatest number of people withdrawing equity from property: 69% of remortgagees in the period covered withdrew equity at an average of £21,000 each.
Most of the additional money borrowed through remortgaging went to home improvements, the CML says.
Last time sales resulted in an average sum of £72,700 withdrawn, the figures show.
Despite these withdrawals, the level of equity held by property owners remains high on average, the CML states.
The median equity held is £56,000 per householder, or some 36% of the average house price, which the CML pegs at £155,000.
Slowing house price growth coupled with higher interest rates is set to stem levels of equity withdrawal, particularly over the next two years, when the CML expects house prices to “slow significantly”.IFAonline
Less environment, more governance threatens to undermine firms' green credentials
Evidence your compliance
Quarter of single pensioners dependent on state