Thousands of homeowners are in negative equity

12/08/2011

Tens of thousands of people are have a mortgage larger than the value of their home.
The number stifled by negative equity was revealed by The Council of Mortgage Lenders (CML), who said before 2005 the number was ‘negligible’.

However, since then the number of those in negative equity has swelled to 830,000 due to super-size mortgages and collapsing house prices.

The report also revealed £250 billion has been wiped of the value of people’s homes during the collapse, regardless of whether they are in negative equity or not.
In 2007, homeowners had £1.05 trillion of ‘housing wealth’- which is the value of their property excluding their loan.

Only four years later that figure has plummeted to £800 billion.

The biggest losers are those who purchased property in 2007 – when the housing market was at its peak – of which nearly a third are in negative equity now.
Overall, the CML said around one in seven mortgages – or 14 per cent – taken out and not redeemed since 2005 were in negative equity.

They added that negative equity was far lower than when it peaked in the 90s to around £1.6 billion.

Paul Smee, CML told the Daily Mail: ‘What typically causes difficulty for households is not a nominal fall in housing value, but an unexpected change in personal circumstances, like the loss of a job or the breakdown of a family relationship.’

Tags; Housing Debt and Bills, Debt Management and Banking, Budgeting Advice,

• Share
• 
• 
• Store
• 
• Follow
•