Homeowners releasing equity in their homes could soon face "serious" financial problems particularly in the face of interest rate rises, according to mform.co.uk.
The online mortgage firm fired its warning following Bank of England figures suggesting £13.2bn of equity has been withdrawn in the first three months of the year.
Mform says some homeowners may have flourished due to rising house prices but could have made a mistake releasing equity to clear debts.
The BoE data showed housing equity withdrawal for the first quarter of 2007 was £1.6bn up on the same period last year but £0.1bn lower than in the last three months of 2006.
Eamonn Rice, chief executive, mform.co.uk says: “The vast majority of homeowners have made thousands of pounds through rising property prices but in releasing some of this, their debt has risen.
“We are concerned that some of these people may have released equity from their homes because they are facing financial difficulties but with rising interest rates, their situation could become worse.”
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