Saturday, Feb 28, 2009
Half a million Lloyds/HBOS customers in negative equity
The Times: Lloyds counts cost of HBOS takeover and property slump as 500,000 customers slip into negative equity
The number of mortgage-holders borrowing from Lloyds Banking Group that are trapped in negative equity surged last year to half a million, the group, which is 43 per cent owned by the taxpayer, revealed yesterday. The bank, which controls 28 per cent of the mortgage market, said that most of these homeowners were customers of HBOS, the bank that owns Halifax and was rescued by Lloyds TSB last month.
HBOS, Britain’s biggest mortgage lender, revealed that 381,669 customers, about 16.8 per cent of its mortgage book, owed more than the value of their homes. At Lloyds TSB, 162,000 homeowners, 15 per cent of its mortgage book, were in the same position.
Posted by koala bear @ 09:36 AM (691 views) Add Comment
7 Comments
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1. uncle tom said...
With low inflation, the negative equity problem will take far too long to clear.
Most western economies face contracting tax receipts coupled to crippling public debt levels.
Inflation would correct negative equity, and erode sovereign debt.
Inflation is therefore becoming an economic neccesity.
2. Global Citizen said...
Does this mean people will stop making payments to bank and start walking out of their houses as soon as it goes into negative equity just like it happened in US?
According to banks models, the people will walk out of their house only after every other option has been tried. But it US it failed miserably, people were not willing to give more money to the bank for a losing investment.
3. Affordablehousing said...
And I wonder on what figures this is all based on.
If the Lloyds/HALIFAX/Bank of Scotland group use it's Halifax average house price, then their figures are an under estimate.
4. timmy t said...
UT - what is necessary is that peole learn not to spend money they haven't got, but they need to work hard and earn more if they want to improve their standard of living. A prolonged period in negative equity will teach that. It will also ensure that economic growth comes from innovation and manufacturing rather than from retail based on MEW. So I don't think inflation is necessary.
5. peter_2008 said...
I am slightly surprised that there isn't much difference in terms of customers in negative equity between one of the most prudent and one of the wildest. If the ex Lloyds and ex HBOS both have over 15% people in negative equity, I think that is more likely the average picture accross the board. And that is a huge number!
6. a saver said...
So what an excellent time for the govt to push them into loaning more dosh! Not!
7. titaniccaptain said...
@Uncle Tom
100% spot on.......but if wages are not linked with inflation........oooowwwww problems and also how do wages follow hyperinflation if its movements are too rapid then businesses will face the problem of over or under paying their work force....