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Homeowners turn to second mortgages to boost finances as inflation soars

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July saw a 60% surge in the amount borrowed on a second mortgage, with a 38% rise in homeowners using the money to consolidate debts as inflation passed 10%.

Figures compiled by secured loans broker Loans Warehouse suggest second charge lending came to £161.4m in July, up nearly 60% compared to last year.

The broker said it was the highest monthly total recorded in 15 years and marked a 13% rise in borrowing on second mortgages from the previous month.

The number of borrowers using second mortgages to pay for home improvements fell, accounting for 14% of lending, while those reporting they needed the money to consolidate more expensive debts rose to 38% of lending in July.

Figures released by the Finance & Leasing Association earlier this month revealed households are increasingly relying on debt, with both the credit card and personal loan sectors together reporting an annual rise in consumer borrowing of 19% in June.

Bank of England data from the same month showed consumers borrowed an additional £1.8bn in consumer credit, of which £1bn was new lending on credit cards.