Five Million Home Owners Face Negative Equity

geoffky

New research has revealed that up to five million home owners could be in negative equity by the end of 2009, if house prices continue to fall.
An estimated 3.8m people either already owe more on their mortgage than their home is worth or are about to. And another 1.2m will be hit if house prices drop by a further 10% to 20%, according to research group GfK NOP, the market research company.
The group also claims around 14% of people who are already in negative equity may be in financial difficulties. Single people aged between 25 and 34, young couples and younger families are most likely to find themselves in trouble. That is because they are likely to have taken out mortgages with high loan to value ratios near the peak of the housing market.
Potential Welfare disaster
GfK NOP said anyone who took out a mortgage and around half of those who have remortgaged since 2005 are likely to be in negative equity, or be very close to it.
It has also warned an estimated 7.2m planning to use their home as part of their pension are also likely to be hit by falling house prices.
Andy Thwaites, director of insight at GfK Financial, said: 'The shift to negative equity has the potential to be a mammoth welfare disaster for the nation.The reality is that if there are further job cuts, the problem will become significantly worse.'
The research, which was based on responses from 60,000 people, also found only one in 10 potential first-time buyers had a deposit of at least 10%.

http://www.home.co.uk/guides/news/story.htm?five_million_home_owners_face_negative_equity

wymondham

I really hope these people keep in employment or this could be a huge problem for 2009/10

System

Unless I'm mistaken, being in negative equity is only a problem for people if interest rates go up too high and a fixed mortgage deal can't be obtained, right?

Personally I don't care what my house is worth, as long as I'm given a fair opportunity to pay my debt off.

Edit: Ah yeah, unemployment as well.

Really2

I am not knocking the figures but it does seem high.

I presume it based on mortgage holders eg joint mortgage = 2 people
so around 2.5M properties (I know it could be more dut to single owners)

Otherwise that is nearly half of all mortgages which seems high considering the average value of all outstanding mortages is around £100K per house hold.

Arcaine

I have a mortgage of 150k on a house we bought for 170k at the end of '06, 2 similar houses got repossed on our street since December and are on the market for £133k to compete with local developers so I guess I am around 17k in negative equity at the moment. As long as I am working there isnt a problem, and I have 6 months payments in the bank and increasing very month my wife and I stay employed. This situation though is going to get very nasty, very soon, my neighbours either side are struggling, one has been told they are closing his place down and he has to move and the other side works in the car industry and is currently off work. So I can well believe these figures.

baileysbattlebus

It seems high to me too

In England there are 21 million households - for the Uk it's about 25 million

Of the 21 million in England - 14.6million owner occupied homes. The rest are rented.

Of the 14.6million owner occupied home 6.6million are mortgage free.
7.97million homes are mortgaged.

Are they seriously trying to say 60% of mortgaged homess are in negative equity?

I think people tend to forget how many people are mortgage free.

The figures are from the end of 2008

chewmylegoff

fatpig wrote: »

How many of these unfortunates will be able to thank Krusty & Phil for their predicament?

none, as if they bought a house on the basis of a stupid tv programme then they deserve to be in negative equity.

b0rker

Really2 wrote: »

I am not knocking the figures but it does seem high.

We will be in those figures. We purchased our home for £105,000 (valued at £108K) in Inverness in September 2007 on a 100% deal. The bank will have us down as being in NE as it is probably worth about £95K now. We will have £20K of savings which we have built up over the past 2 years. Our current deal ends in September 2009. We should have another £10K saved by then. We will then take our mortgage down to £75K. I cannot see the market in Inverness dropping so far that our house will be worth less than 85K so I think we should be okay to secure a 90% deal at some point. Will probably sit on the SVR and overpay for a wee while is we are feeling brave.

Anyway those stats may be a wee bit misleading if there are more people like us.

Pssst

chewmylegoff wrote: »

none, as if they bought a house on the basis of a stupid tv programme then they deserve to be in negative equity.

But werent they driven on like galley slaves rowing to the beat of Krusty,Phil et al? They didnt really have a choice ? They had to row or be lashed and/or left behind. Now the drum has stopped beating,the drummers have fled and the oarsmen are becalmed,in the doldrums and rudderless. Waiting for the economic storm to envelop them and dash them into driftwood......aahharrggg

ad44downey

Kirsty Madoff and Phil Stanford had quite an infuluence I shouldn't wonder. They're doing some serious backtracking at the moment it has to be said.

Dan:_4

fatpig wrote: »

How many of these unfortunates will be able to thank Krusty & Phil for their predicament?

ad44downey wrote: »

Kirsty Madoff and Phil Stanford had quite an infuluence I shouldn't wonder. They're doing some serious backtracking at the moment it has to be said.

I hadn't even heard of these two people until I started reading this board.