Almost one in 10 in negative equity

Apr 18 2009 by Liz Hands, The Journal

Almost one in 10 (9.2%) of owner-occupied houses are estimated to be in negative equity in the North while East Anglia, which suffered badly in the 1990s, has remained relatively unscathed (0.9%).

There were around 565,000 mortgage holders in the UK who are not in negative equity but whose equity would not constitute a 5% deposit on an average priced house for a home mover in their region.

A further 535,000 still have enough equity for a 5% deposit but not enough for 10%.

Bob Pannell, the CML’s head of research, said: “One big difference from the early 1990s downturn is that it is less concentrated among young, first-time buyers, and more evenly spread across wider age groups and those at different points on the housing ladder.

“Negative Equity will contribute to subdued property turnover, but otherwise should have few adverse effects for the majority of households affected.

“Where people need to move house for job or other priority reasons, lenders can often be flexible to existing borrowers with low or negative equity as long as their financial position is sound and they have a good payment track record.

“Otherwise, sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt.”