More than 800,000 stuck in negative equity

| August 9, 2011 | 0 Comments

A report by the Council of Mortgage Lenders (CML) has revealed 827,000 mortgage borrowers are in negative equity (a mortgage worth more than their property).

However, the figures which relate to the first quarter of the year, are not as bad as they were in the early 1990s, when around 1.6 million households were trapped in negative equity.

CML director general, Paul Smee, comments: “Negative equity is much less common than in the 1990s, and in the current cycle low interest rates and a relatively stable employment market are providing more options for borrowers and lenders in difficulty.”

According to the Council, the majority of those in negative equity bought their home at the peak of the housing market in 2006 and 2007 and have, therefore, suffered from house price falls.

The CML believes around 326,000 of the 827,000 households in negative equity are first-time buyers.

The report comes as the Royal Institution of Chartered Surveyors (Rics) revealed yet another gloomy assessment of the housing market.

According to Rics, the UK housing market remained weak in July with house prices falling further.

The Rics report said 22% of surveyors reported house prices fell rather than rose. While this represents a marginal rise on June’s figure, the reading has been in negative territory for more than a year.

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