Homeowners borrowed £14.4 billion through secured loans last year as they cashed in on increases in the price of their property, a report said yesterday.

Market analyst Datamonitor said more than 700,000 secured loans, with an average value of more than £20,000, were taken out during the 12 months.

The total advanced was up more than 37 per cent from 2001's figure of £10.5 billion, as the market was boosted by good economic conditions, rising house prices and the high levels of unsecured debt people had taken on.

The group estimates the market will continue growing and be worth more than £22 billion by 2007.

Secured loans, which are also referred to as second mortgages or homeowner loans, are secured against a borrower's property in the same way as a mortgage.

Report author Alex Boorman said: "Rising house prices have not only increased homeowners' perceived wealth.

"They have also given many homeowners the ability, due to the equity they have in their home, to borrow for costly items such as new cars, brown and white goods and home improvements on a secured basis."

High levels of debt have also raised the profile of the loans as people have looked for ways to consolidate their borrowings into one cheaper monthly payment.

People owed an average of £3,800 on credit cards, loans and other unsecured debt last year and debt consolidation accounted for more than 60 per cent of the £14.4 billion advanced through secured loans.

Datamonitor expects increasing numbers of people to turn to debt consolidation because, while economic conditions look set to remain steady, interest rates are likely to rise.

Mr Boorman said: "As this happens, more consumers will struggle to meet repayments on their unsecured debt and debt consolidation will account for a larger share of total secured loan gross advances."

The increasing popularity of the loans is reflected in the rise in the amount lenders and credit brokers spend on advertising.

Last year, brokers and lenders spent more than £41 million advertising the products, up from less than £2 million in 1998.