Homeowners pinned down by shrinking equity

| August 16, 2009
”Homeowners

The housing market downturn has left up to 3.5 million Britons unable to move, according to research from John Charcol.

The mortgage broker estimates that one third of UK households with residential mortgages are stuck in their properties because falling prices have eroded the amount of equity they hold and restricted access to mortgage finance.

The firm has calculated that around two million households are either in negative equity or have seen their stakes in their properties shrink to below 10%.

A further 500,000 hold equity of between 10% and 15% and an estimated one million are effectively excluded from the mortgage market because their home loans fall into the sub-prime or self-cert categories.

John Charcol spokesman, Ray Boulger, comments: “When most people move they rely on the equity in their property to provide the bulk of the deposit required for their new property, which is currently a minimum of 10% in most cases, plus moving costs, of which stamp duty land tax is often the biggest.”

He goes on to warn: “Having such a large number of households who are currently unable to move is not only a serious problem for the people concerned, but also has important macro economic consequences.”

Tags: , , ,


Comments (0)

Trackback URL | Comments RSS Feed

There are no comments yet. Why not be the first to speak your mind.

Comments are closed.