Tuesday, June 10, 2008

Shouldn’t that be ‘Millions face negative equity’?

Thousands facing negative equity

end of article: 'House prices are down 6% in just the last five months, and the worst of the credit crisis - all that still lies ahead," said Michael Saunders, head economist at Citigroup. He had predicted that house prices would fall by 15% in 2008 and 2009 but now he says that drop could be even greater.'

Posted by quiet guy @ 01:05 AM (652 views)
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6 thoughts on “Shouldn’t that be ‘Millions face negative equity’?

  • mark wadsworth says:

    Yes, it should be millions. Back of fag packet says, every 1% fall in values = another 100,000 in Nequity. So there are probably about half a million in Nequity already.

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  • My fag packet is a bit more pessimistic

    Taking into account second mortgages, I reckon there are already over 1 million in NE.

    As a real time reckoner, take the Halfax index at £185k to indicate the million mark. Every £1k off that figure puts another 100,000 in NE.

    I reckon that’s a pretty good ‘ready reckoner’ until prices have dropped to £140k, at which point the rate at which people join the NE club will begin to slow a little, relative to house price.

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  • “Could fface negative equity”.

    I do not think that there is any “could” about it. If you bought 100% mortgage in the last year, you ARE in negative equity.

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  • mark wadsworth says:

    Uncle Tom, Alice Cook reckoned that LTV’s are a more or less straight line between 1% (nearly paid off) and 100% (or more!). Ballpark there are 10 million o/s mortgages. Ergo, each one % fall puts another 1% x 10 million = 100,000 mortgage borrowers into Nequity.

    Using your fag packet, a fall of 25% would put 5 million or so into Nequity, using mine it’d be 2.5 million.

    But we can always split the difference, who cares, I’m renting for the time being.

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  • My fag packet is a little more optimistic, as it considers that now – more than ever before – more mortgages and properties are held by fewer people. Everyone elses pessimistic fag packets probably assume one mortgage=one person. Personally I assume 10 mortgages=1 greedy BTLer. Therefore there probably are not 500,000 people in negative equity. There are probably 50,000 BTLers. BUT BY GOD THEY WILL BE FEELING THE PINCH x10!!!! MWAHA…MWA….MWAHAHAHAHAH!!

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  • crash bandicoot says:

    What about MEW? What about IO mortgages? To say that those who bought with 100% mortgages last year MAY be in negative equity is lazy journalism of the utmost degree.

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