As house prices continue to fall, thousands of homeowners may find themselves stuck with properties worth less than the amount they borrowed.
United Kingdom of Great Britain & N. Ireland (Press Release) June 13, 2008 --
As house prices continue to fall, thousands of homeowners may find themselves stuck with properties worth less than the amount they borrowed, according to figures released this week by the Council of Mortgage Lenders (CML). The BBC has interpreted these figures to conclude that more than 23,000 people who took out 100% mortgages over the last twelve months to March could be facing negative equity on their properties.
House prices have fallen by 5% since last March, according to Halifax, the UK’s biggest lender. Prices fell by 2.4% in May alone, the biggest fall in a single month since 1992, and some analysts are predicting a slump of more than 20% over the next two years, which could threaten some 2 million homeowners with negative equity.
Those homeowners who currently have fixed-term deals will be facing higher mortgage repayments when the deal comes to an end since most 100% mortgages have been withdrawn from the market in recent months. This means that the loan will revert to the lender’s standard variable rate, which on a £200,000 mortgage could mean increases of between £240 and £500 a month. People in this situation are advised to find out how much extra they will have to pay and to start saving the difference now, to cushion the shock. That way the savings can be used to reduce the amount they will need to borrow when looking for a remortgage, and this could be just enough to stave off the threat of negative equity.
The CML hit back at the BBC’s claim that 23,000 people are already in negative equity, a conclusion arrived at by the BBC on the basis of the CML figures. CML spokeswoman Sue Anderson said that there was no guarantee that all of the 100% mortgage holders were in negative equity as it was impossible to monitor the level of repayments being made. She added that the 23,000 figure represented a tiny proportion of the 12 million mortgages in the UK, with some 900,000 taken out every year, and that “These figures should be reassuring rather than spooking people as the number [who took out 100% mortgages] is so small.”
Separate figures from the Royal Institution of Chartered Surveyors (RICS) show that the number of transactions per estate agency had hit a 30-year low, an outcome of the stricter lending criteria being imposed by banks in the wake of the credit crisis.
“The threat of negative equity is relative to the homeowner’s ability to pay the mortgage,” said Lawrence Smith of Decision Homebuyers. “If the homeowner can afford to wait out the current drop in prices, the property is likely regain and increase its value in the longer term.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
House prices have fallen by 5% since last March, according to Halifax, the UK’s biggest lender. Prices fell by 2.4% in May alone, the biggest fall in a single month since 1992, and some analysts are predicting a slump of more than 20% over the next two years, which could threaten some 2 million homeowners with negative equity.
Those homeowners who currently have fixed-term deals will be facing higher mortgage repayments when the deal comes to an end since most 100% mortgages have been withdrawn from the market in recent months. This means that the loan will revert to the lender’s standard variable rate, which on a £200,000 mortgage could mean increases of between £240 and £500 a month. People in this situation are advised to find out how much extra they will have to pay and to start saving the difference now, to cushion the shock. That way the savings can be used to reduce the amount they will need to borrow when looking for a remortgage, and this could be just enough to stave off the threat of negative equity.
The CML hit back at the BBC’s claim that 23,000 people are already in negative equity, a conclusion arrived at by the BBC on the basis of the CML figures. CML spokeswoman Sue Anderson said that there was no guarantee that all of the 100% mortgage holders were in negative equity as it was impossible to monitor the level of repayments being made. She added that the 23,000 figure represented a tiny proportion of the 12 million mortgages in the UK, with some 900,000 taken out every year, and that “These figures should be reassuring rather than spooking people as the number [who took out 100% mortgages] is so small.”
Separate figures from the Royal Institution of Chartered Surveyors (RICS) show that the number of transactions per estate agency had hit a 30-year low, an outcome of the stricter lending criteria being imposed by banks in the wake of the credit crisis.
“The threat of negative equity is relative to the homeowner’s ability to pay the mortgage,” said Lawrence Smith of Decision Homebuyers. “If the homeowner can afford to wait out the current drop in prices, the property is likely regain and increase its value in the longer term.”
For press enquiries, please contact Phil Rendall on 020 7099 9026
Email: phil@dhbuyers.co.uk
Web: www.decisionhomebuyers.co.uk
News provided by Decision Homebuyers, a leading UK property company offering a quick and simple solution for selling your home, no matter what the condition.
Decision Homebuyers carries out daily surveys of the national media to provide up-to-date news and commentary on the UK property market.
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