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Negative equity could hit many more

May 16, 2009 by admin  
Filed under News, News-Mortgages

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As a result of the house price crash that has seen a large percentage wiped off the value of UK properties over the past eighteen months it has been estimated that around one million homeowners have already been plunged into , which is where they owe more on their property than the actual value of the home.

Many homeowners have been affected, and in particular those that purchased their homes in the couple of year leading to the 2007 peak before the bubble finally burst.

However, the situation could get worse, and one industry group has said that if house prices continue to fall then a further one million homeowners could find themselves in the same situation. Whilst property prices increased slightly in March, many experts have warned not to see this as a serious sign of recover.

However, there have been mixed reports, and some have even suggested that the housing market is now close to bottoming out, which means that prices could start to increase again.

The Council of Mortgage Lenders has issued the warning over negative equity, and this has been echoed by a variety of other industry groups. One official said that not only was the housing market suffering due to people already in negative equity, but also that it could be putting people off from purchasing property due to the possibility of negative equity.

He stated: ‘While the fall in house prices and the parallel reduction in interest rates has probably made many households curious about what is available in the market, many are likely to be hesitant to commit in a recessionary environment of rising unemployment and increasing uncertainty about future incomes.’

Tags: situation, house value, Mortgages, fall, bank of england, property market, households, negative equity

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