UK Money News
11th June 2008
20,000 could be facing negative equity
The decline in the housing market could have left 20,000 homeowners facing negative equity, new figures suggest.
Data from the Council of Mortgage Lenders (CML) found that 23,200 borrowers have taken out 100 per cent mortgages in the 12 months to March 31st.
With house price indices showing that values have fallen by as much as 4.4 per cent from this time last year, it is likely that several of these are already facing a situation where the sum they owe on their loan is higher than the value of their property.
Responding to the figures, Sue Anderson of the CML, appealed for calm and highlighted the fact that the 100 per cent home loan is sector is a small part of the mortgage market.
She told the Guardian: "We don't know how the borrowers have behaved - we don't know the extent to which they have injected overpayments into their mortgage.
"It is perfectly reasonable to assume they haven't, as they had to borrow up to 100 per cent, but not all of them will have seen their house fall in value."
Ms Anderson added: "The housing market isn't a homogenous whole - prices behave differently in different areas. And most people who bought in the past year probably won't be looking to move yet anyway."
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