Over 800,000 homeowners are facing negative equity, with their the size of their mortgage debt outweighing the value of their home, according to new figures from the Council of Mortgage Lenders (CML).
Around 7% of all homeowners in the UK had negative equity in their homes, while the CML revealed that the property market crash of 2007/08 wiped £250 billion off the value of property. The figures are lower than the 900,000 recorded in April 2009 and around half that of the 1.6 million of the early 1990s.
How to deal with negative equity
If you’re in negative equity, it’s unlikely that you will be able to remortgage as most deals that let you borrow more than 90% of the property’s value have disappeared.
This means you may be forced to stay on your lender’s standard-variable rate (SVR) with no option to go elsewhere, although many standard variable rates have proved to offer good deals recently because the Bank of England base rate of interest they follow has fallen so much.
First-time buyers return
In a ray of hope for the housing market, the latest data from the CML shows the highest number of mortgages taken out by first-time buyers in 10 months
In June 2011, 18,100 loans were given to first-time buyers, worth £2.2 billion, 29% higher than in May.
Find out more about how to buy a home and help for first-time buyers in our guides.
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