16 May

First-time buyers 'should not be afraid of negative equity'?

First-time buyers 'should not be afraid of negative equity'?

Property owners who find their homes are now worth less that their mortgages should not panic, an expert has advised.

Research by Morgan Stanley and reported in the Times predicts one in ten homeowners will be pushed into negative equity over the next two years as house prices continue to drop.

First-time buyers will be the most affected by the problem but have been advised to stay calm and hold on to their properties.

Paul Holmes, operations director for property ladder advisers Firstrung, says it's a matter of "weathering the storm" until the market recovers.

He explains: "There is no alternative because in this market place you couldn?t sell to recover your losses anyway."

If house prices fall by 25 per cent over the next two years, Morgan Stanley predicts more than a quarter of all borrowers will be in negative equity.

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