Falling house prices put more in negative equity

30/01/2009

House prices continue to fall in the UK, potentially putting 1.2 million people in to negative equity.

Nationwide, a mortgage lender, said that the value of the typical property dropped another 1.3 per cent in January.

This brings the annual decline of house prices to 16.6 per cent.

The credit crunch and recession were blamed by Nationwide for the continuing property slump.

Michael Saunders, the head of European economics at Citigroup, made the negative equity estimate, the Daily Telegraph reports.

Negative equity - which occurs when the loan taken out to pay for a home is higher in value than the home itself - remains a big threat to many Britons.

Being in negative equity makes it hard to move home or to secure a cheap mortgage loan - meaning that debts can rapidly mount.

Commenting on the figures Martin Gahbauer, Nationwide's senior economist, said: "The deepening economic recession and financial market turbulence continued to weigh on housing market sentiment and activity."

Latest house price statistics from Halifax also show an annual decline of around 16 per cent.

Tags; Housing Debt and Bills, Young Family Finances, Credit Card Lifestyle,

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