Agency predicts 'negative equity crisis'

31/07/2008

One in seven UK householders could be in negative equity in the near future, Standard & Poor's (S&P) has claimed.

Data released yesterday from the ratings agency shows that a predicted 17 per cent fall in house prices from current levels in 2008 would leave 1.7 million homes - 14 per cent of the total - with mortgages worth more than their property.

Britain's buy to let landlords are anticipated to be particularly badly hit by the trend - with S&P estimating that one in five will fall into the financial trap.

Currently, around 0.6 per cent of Britain's homeowners are in negative equity.

Andrew South at S&P said: "The downward trend in UK house prices now seems well established, and we expect prices to continue falling in the near term".

Liberal Democrat shadow chancellor Vince Cable - who predicted that millions would fall into negative equity in the UK earlier this year - said that he was not surprised by the figures.

"Most people experience negative equity in a purely theoretical sense because they don't have to move and can sustain their payments," he added.

"But we must make sure help is given to the growing numbers of households in mortgage distress."

Tags; Current UK Economy, Housing Debt and Bills,

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