Friday, September 9, 2011

UK: 1.7m home owners face negative equity

Up to 1.7m home owners face the spectre of negative equity according to new housing data.

Currently more than 800,000 home owners – 7.3pc of all households with a home loan – have a mortgage that is bigger than the market value of their property.

But thanks to lax lending during the credit boom, and several years of house price falls, this number could double if property prices dip a further 10pc. This would mean that almost as many home blighted by negative equity in the early 1990s after the last housing crash.

The data, by mortgage administrators Homeloan Management Limited (HML), was based on 250,000 mortgage accounts across the country. It shows that home owners in Northern Ireland and the North West of England are likely to be worst hit by further property price falls.

With this price fall, one in three home owners in Northern Ireland could be trapped by negative equity.

Not surprisingly, this problem will adversely affect those under 40, who have moved onto the property ladder more recently. more