Hopeless times for home owners

Falling house prices mean that two million households have either negative equity, or too little equity to finance a house move, lenders have said. Negative equity is the situation where someone's house has become worth less than their mortgage.

Research by the Council of Mortgage Lenders (CML) said two thirds of the 900,000 homes in negative equity had only a modest shortfall of less than 10%. But this is fewer than the 1.5 million estimated to have been in this position more than a decade and a half ago. Of the households currently in negative equity, about 270,000 have a shortfall of between 10% and 20%, and about 30,000 have a shortfall of 20% or more. In those most extreme cases their negative equity amounts to an average £28,000 for first-time buyers and £37,000 for other home owners.

The CML carried out its research by looking at data supplied by its members. With house prices dropping by about 18% since the middle of 2007, the fall in prices has already outstripped the national price drop experienced during the early 1990s house price crash.

My PA in the mid-90’s had negative equity in her property and it place enormous pressure on her family circumstances. It was tough to watch and even tougher to live with.

Gareth