11 Jun

Negative equity worries "wide of the mark"

Negative equity worries "wide of the mark"

Fears of a widespread negative equity problem in the UK are unlikely to be realised, Your Mortgage has said.

The magazine noted that the value of a property and the amount of equity owned by the borrower are only important if the owner is selling their home or remortgaging.

In addition, house prices trends vary considerably across the country. Although prices are falling generally in Britain, that may not be the case in everyone's street or area.

The National Association of Estate Agents emphasised this point yesterday, suggesting that in order to get a clear idea of the state of the housing market, people should look at the regional picture.

Pauline McCallion, editor of Your Mortgage, commented: "If a borrower wishes to sell or remortgage, having a 100 per cent or 100 per cent-plus mortgage at the moment does not necessarily mean they will be in negative equity."

"If they took it out two or three years ago, such borrowers could have repaid enough to bring their loan-to-value down to 95 per cent or less," she added.
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