7 Jul

Negative equity 'unlikely'

Negative equity 'unlikely'

Most homeowners are unlikely to experience negative equity, according to new research by GE Money Home Lending.

The organisation found that the average property purchased four years ago will now have around a 50 per cent buffer, based on today's prices.

In addition, its study showed that an average London property bought in 1995 would have to depreciate by 72 per cent for the owner to get into a negative equity situation.

Gerry Bell, head of mortgage marketing at GE Money Home Lending, emphasised that it is important for people to look at "the broader picture" on this issue.

"Over the past decade homeownership has delivered fantastic returns for many borrowers and we would need to see unprecedented falls in property prices for the average home owner to be severely impacted," he said.

Negative equity occurs when the value of a property is less than the outstanding amount on the loan taken out against it and is a situation some homeowners experienced during the last housing slump in the 1990s.

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