31 Jul

S&P warns of negative equity risk

S&P warns of negative equity risk

If house price falls continue at their present rate 1.7 million British homeowners could be at risk of negative equity, Standard & Poor (S&P) has claimed.

According to today's house price figures from Nationwide, property values dropped by 1.7 per cent in July, the ninth consecutive month of falls.

If this carries, those who purchased their property at the height of the boom in 2007 with high loan-to-value ratios, are at the highest risk of negative equity.

"The downward trend in UK house prices now seems well established and we expect prices to continue falling in the near term," S&P said in a statement.

If the number of people experiencing negative equity does climb to the level the group has predicted, it will begin to equal the housing crisis of the early 1990s.

Negative equity occurs when the amount outstanding on a person's mortgage is higher than the value of their home.

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