Borrowing rockets to record £7bn

A CONSUMER boom could be in the offing after Bank of England figures showed homeowners borrowing a record £7bn against the value of their property in the last three months of 2001.

The figures came as a March survey from the Recruitment & Employment Confederation found that the number of people placed in permanent jobs by recruitment companies rose for the first time in 11 months, giving a further indication of great consumer confidence for the months ahead.

The Bank of England's latest figure for mortgage equity withdrawals was up from the downwardly-revised £6.8bn in the previous quarter and marked a huge leap on the £3.4bn in the same period the year before.

Deutsche Bank economist George Buckley said the figures were fuelled by the rising value of property and historically low rates of interest. The Bank dropped rates to their current 4% during the period.

'People are finding it is a lot cheaper to borrow money and are spending it on a new car or white goods for the home,' Buckley added.

Much of the equity already withdrawn is now in bank deposit accounts, he said, so there are huge cash reserves waiting to be spent on consumer goods, which make up 70% of Britain's gross domestic product.