Bank of England figures released Friday show that borrowing against the value of homes rose sharply to a record £13.43 billion in the third quarter of 2003.

This compares to an average of £11.5 billion over the first and second quarters of the year and just £9.8 billion for the third quarter of 2002.

Mortgage equity withdrawal (MEW) has been rising strongly for several years and a renewal of this form of borrowing may worry the Bank, which has repeatedly voiced its concerns over Britons' rising indebtedness.

MEW unlikely to affect interest rate decision

The new MEW figures from Q3 2003 are unlikely to spur an interest rate rise at this week’s MPC meeting, predict city analysts who say the Bank will probably pay more attention to the more recent data on mortgage lending and approvals.

Evidence of weak consumer spending in the run up to Christmas, together with confirmation that the housing market is at last starting to slow, is thought likely to persuade the MPC to stay its hand, for the time being at least.

How the Bank estimates mortgage equity withdrawal

The Bank’s estimate of mortgage equity withdrawal (MEW) is intended to measure that part of secured borrowing that is not invested in the housing market. It takes the increase in housing finance (net mortgage lending and capital grants) and subtracts households’ investment in housing (purchases of new houses and houses from other sectors, improvements to property, and the transactions costs of moving house).