Negative equity fears again, 1990s much worse

Negative equity fears again, 1990s much worse

While the UK is gripped by a series of riots, homeowners have another menace to fear far more, and that is negative equity. According to CML 827,000 homeowners have learned that their loans are much more than the value of their homes. Now we do not want people to worry too much, as the issue was much worse in the 1990s – still you cannot help wonder what is happening to our country.

Back in the 1990s the amount of homeowners in negative equity was 1.6 million, so there is still some breathing space. However, this is a sign that we still have a way to go until we can get ourselves out of this hole that most of the world seems to be in. Let’s try not to lose grasp of the situation just yet, as most of you will not even want to sell your home, so it does not matter how much it is worth.

We cannot see the issue becoming as worse as it was, because back when things were much worse the interest rates were much higher. Interest rates are still very low and they will never get as high as they did all those years ago, as that would stall growth, which is what the UK so desperately needs.

BBC News says that there is no need to worry, as it is only thought that just 8 percent of mortgage holders owe more on their loan than their homes are worth. One of the reasons for this is because homeowners are facing finical difficulties due to the current recession, and so have borrowed more than they can actually afford. Also people using unsavory mortgage brokers to get them mortgages that they cannot afford has not helped the situation – but the FSA has now started to crack down on this issue.

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