UK Money News
25th April 2008
Most first time buyers are 'fairly safe' from negative equity
The majority of first time buyers should not panic over reports that levels of homeowners facing negative equity are set to increase this year.
According to Andy Pratt, a spokesperson for Alexander Hall, novice home buyers who were granted a mortgage before 2007 will actually be "fairly safe".
This even applies to those with 100 per cent mortgages granted during this time, since the house price growth since then should mitigate the problem, he claims.
However, first time buyers who have taken out 95 per cent loans in the last year are genuinely at risk.
Mr Pratt said: "By my calculations, and this is consistent with some of the key commentators on the mortgage lender's side, we believe that the only people that are at risk of negative equity are those first-time buyers that took out a 95 per cent loan-to-value mortgage in 2007."
A report issued by Morgan Stanley recently projected that around 1.2 million home owners are facing negative equity this year, with house prices set to fall 15 per cent over the next two years
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