Negative equity forces couples to live together

Charity officials have recently stated that there are many estranged couples that are being forced to live together under the same roof as a result of the property still being in negative equity, which means that they are unable to sell their home and move on as a result of the relationship ending. Read more

Tags: percent, negative equity, finance, Personal life, Homelessness, partner

Mortgage Defaults on the Rise as More People Become Unemployed

According to experts at City the number of homeowners defaulting on their mortgage could rise to about 400,000 by 2011 with the number of unemployed reaching a high of 3.5 million.

Ed Stansfield of Capital Economics equates the results of the current recession to that of the early 1990’s. At that time the housing crash and the recession resulted in 350,000 mortgage defaults. He expects that the unemployment statistics for 2011 will exceed that of the early 1990’s because of the close association between job losses and the inability of homeowners to make their monthly mortgage payments.

Stansfield projects that unemployment figures will reach a staggering 3.5 million by 2011. Banks are reporting that there are signs that this prediction is very likely to become reality.

Reports from Lloyds Banking Group show that at least 20% of the customers are now in a state of negative equity where they owe more money on their home than it is worth on the housing market.

As of the end of June, 2009, the largest High Street bank in Britain says over 83,000 of its mortgage customers are currently in arrears, representing an increase of 26% from 2008. The figures of arrears at the Bank of Scotland have not yet been released, but Northern Rock, a nationalised bank reports that it has more than 22,000 customers in arrears.

The Halifax division of Lloyds, though, is reporting that they are seeing signs of improvement in the housing industry. This is based on the fact that house prices are on the rise. In July house prices rose by 1.1% to an average price of £159,623. In spite of this increase, however, house prices are still about 12% lower than what they were last year with an average home selling for about £180,000.

The Royal Institute of Chartered Surveyors warns consumers not to read too much into the data. According to a spokesperson for this institute, “There has been a clear change in the housing market in the last few months and as a result it is unlikely that we will now see the kind of house price falls widely predicted at the start of the year. However, the outlook for 2010 is fairly uncertain and there is a real risk prices may slip back. Affordability is still stretched and mortgage finance, while improving, is fairly hard to come by.”

There is no need to panic if you feel that you are in danger of losing your job and think that you may end up defaulting on your mortgage putting your home at risk. Those who are finding themselves facing unemployment should discuss options with their lenders so that they can find ways of being able to continue making their payments and enjoying a clean credit record.

Lenders do recognize that during this recession there are many people in financial difficulty and are willing to help them find ways of easing the burden.

Tags: mortgage defaults, Stansfield, Royal Institute, increase unemployment, monthly mortgage payments, negative equity, recession, capital

Negative equity could hit many more

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 negative equity, which is where they owe more on their property than the actual value of the home. Read more

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

Many jobs to be affected by credit crunch

Most people are sick of hearing the term ‘global credit crunch‘, but sadly this is s term that many of us have had to get used to over the past year. Read more

Tags: credit crunch, job losses, job sectors, doubt, negative equity

With rents falling is this the time to rent your home?

Over the past year a large number of people have been pushed into renting a home rather than buying one, and this is largely because lenders have become far more stringent over giving out mortgage loans, which has made it difficult for many people to get the finance that they need to purchase a home. Read more

Tags: stabilise, family, rents, negative equity, order, right time, Mortgage loan, chelsea

House price falls worse than last crash

In the 1990s, many people will remember that there was a house price crash that plunged many homeowners into negative equity, and a lot of people will have concerned memories of this time following the past year, when house prices have been tumbling month on month. However, according to officials from the Halifax, its records show that based on a peak to trough bases the current situation has already outstripped the 1990s crash. Read more

Tags: past year, prices, halifax, Real estate economics, situation, negative equity, finance, house prices

Fool.co.uk: House price standstill could ‘imprison’ first-time buyers

Many first-time buyers may fail to sell their home at a price high enough to cover their mortgages if house prices begin to fall.

Fool.co.uk states that people who have recently bought homes on 100 per cent mortgages could suffer from the evening out of house prices and that they have cause to be “concerned”.

Although 100 per cent mortgages are not a significant part of the market, the Council of Mortgage Lenders estimates that they are taken out by one in every 20 first-time buyers.

The website warned that these homeowners would suffer from even a small downturn in prices, leading them into negative equity.

However, David Kuo, head of finances at Fool.co.uk, advised: “They can tip the scale in their favour by ensuring that they choose repayment mortgages rather than the cheaper interest-only options. They should also overpay their mortgage as often as they can afford.”

Mr Kuo added that doing this would help them to chip away at their debt and give them more equity in their homes allowing them an improved choice of mortgage provider.

In the UK, house prices have seen a slowdown in recent weeks with borrowing costs still high and the Bank of England’s decision to hold interest rates at 5.75 per cent meaning the pressure on people repaying mortgages remains high

Tags: borrowing, David Kuo, people repaying mortgages, chip, Mortgage loan, market, bank of england, negative equity