Many homeowners 'at risk of negative equity'

Date:Wednesday 11th February 2009
Author: Rachel Fletcher

A new poll of homeowners in the UK has revealed that many could be at risk of negative equity.

Fairinvestment.co.uk spoke to 2,000 mortgage holders and discovered that 21 per cent have borrowed more than 90 per cent of their property's value.

And with the Financial Services Authority predicting that more than two million homeowners could be at risk of negative equity should prices fall by 30 per cent from late 2007's levels, many of these high loan-to-value borrowers could be hit harder than most.

"These homeowners could now be at risk of negative equity as house prices continue to come down, particularly if they bought their house within the last three years," said Sharon Bratley, chartered financial planner with Fairinvestment.co.uk.

However, she added that most people would not be an issue for those who decide against selling before the market improves.

According to last month's house price index from Halifax, the average price of a home in the UK grew by 1.9 per cent.