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Last Updated: Thursday, 29 June 2006, 09:40 GMT 10:40 UK
Mortgages debt tops 1 trillion
Browsing at an estate agent
Mortgage debt has been driven by ever higher house prices
Mortgage debt has gone through the 1 trillion level, according to figures from the Bank of England (BOE).

An extra 9.3bn was borrowed to buy homes in May, increasing outstanding mortgage debt to 1.007 trillion.

However, the value of unmortgaged property across the UK is much higher at about 3.6 trillion.

According to the Nationwide, the average house now costs nearly 166,000 with mortgage repayments absorbing 42% of average take home pay.

The BOE figures show that Britons have a further 192bn outstanding on credit cards and other loans, so total personal debt now amounts to 1.199 trillion.

It was in 2004 that all personal debt first went through the 1 trillion level.

But the continued buoyancy of the property market and the steady rise in house prices has driven up the amount of debt due to mortgages alone.

The Council of Mortgage Lenders (CML) pointed out that the figure for outstanding debt has also been pushed higher by the continuing spread of home ownership, which has gone up from 60% to 70% of the population during the past twenty years.

CML spokesman Bernard Clarke said: "The number of 1 trillion itself, while a huge sum, does not have any great significance for policy makers or anyone else.

"Over time, owner-occupation is a source of wealth and independence for the overwhelming majority."

The CML believes home ownership has not reached any natural limit and expects both home ownership and mortgage borrowing to continue expanding.

Mortgage debt has also been boosted by the enthusiasm of home owners for borrowing against the increased value of their homes, known as mortgage equity withdrawal.

More than 200bn has been borrowed this way since the start of the decade.

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