Figures reveal that one in seven homes are now in negative equity. Recent research shows that a total of 827,000 homes were in negative equity during the first three months of this year. This has led some researchers to say that seven per cent of mortgaged households would actually owe money if the property is sold at current prices.
The negative-equity level is only 73,000 lower than the figure was in April 2009 – immediately after home prices has some of their steepest falls.
The biggest negative-equity losers are the homeowners who bought in 2007, the year that house prices peaked at an average of nearly £200,000. Nearly a third of these homeowners are now in negative equity.
Among the worst-affected areas are the north-east, Yorkshire and Northern Ireland. However the Council for Mortgage Lenders – who carried out the research – have said that the number of properties in negative equity is far lower than during the early 1990s, when the level was around 1.6million.
‘In the current cycle, low interest rates and a relatively stable employment market are providing more options for borrowers and lenders in difficulty, explained the council’s director general, Paul Smee.
‘What typically causes difficulty for households is not a nominal fall in housing value but and unexpected change in personal circumstances – like the loss of a job or the breakdown of a family relationship’.
The Council of Mortgage Lenders’ report also revealed that £250 billion has been wiped off the value of people’s homes during the collapse, whether they are in negative-equity or not.
In 2007, homeowners had £1.05 trillion of ‘housing wealth’ – the value of their property excluding their loan. But now, a mere four years later, this figure has dropped to just £800billion.