UK Money News
30th July 2008
Negative equity threat looming for 1.7m
The number of people facing negative equity is set to swell over the next year and a half, it has been predicted.
Credit ratings agency Standard & Poor's (S&P) predicts that between now and the end of 2009, house prices will fall by a further 17 per cent, bringing the total depreciation in values to 27 per cent from the peak of the market.
The company calculates that if this was to transpire around 1.7 million people would be pushed into negative equity.
S&P said: "The downward trend in UK house prices now seems well established, and we expect prices to continue falling in the near term.
"As an approximate rule of thumb, for every further percentage point decline in house prices, a further 0.5 per cent to 1.5 per cent of borrowers, or around 60,000 to 180,000 people, could enter negative equity."
Earlier this year, Morgan Stanley predicted that UK house prices are set to slump by 20 per cent by the end of 2010, putting two million households at risk of holding a mortgage that is worth more than their house.
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