Monday, August 8, 2011

CML says that 827,000 households are in negative equity

14% of mortgages originated since 2005 in negative equity

A quarter of those with mortgages originated since Q2 2005 have equity of less than 10% in their homes, according to research published today by the Council of Mortgage Lenders. In its report, Housing equity: a market update, the CML says that 14% of loans originated over the past six years that are still outstanding are in negative equity, while a quarter have either low levels of equity or are in negative equity.

Posted by jack c @ 04:14 PM (1660 views)
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9 thoughts on “CML says that 827,000 households are in negative equity

  • mark wadsworth says:

    Oh these poor darlings, surely the government won’t renege on its implied promise that house prices can only go up? How about putting a stop to all new development, scrapping council tax and reintroducing MIRAS?

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  • How about the government just write off their mortgages for them with a new batch of freshly printed money. That will get the economy going with a bang.

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  • mark wadsworth says:

    Khards, you’re a bit off piste with that one.

    The govt wouldn’t just print some money and give it to people in nequity, that’s far too simple and obvious and it’d be clear what they’re doing and why. Or even better, they could just pass a law saying that if you’re in nequity and sell your house, the balance is written off as irrecoverable. There are worse things at sea – what’s 827,000 times £25,000 (or whatever average nequity is)? It’s about £21 billion, and banks have balance sheet totals (or so they claim) of £7,000 billion. It’s a flea bite on a storm in a teacup to the big clever powerful banking chappies, they can waive their bonuses for two years, problem solved.

    No, the government prefers to give the new money to banks in the vague hope that the banks will lend it to another generation of suckers to keep house prices going up.

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  • Some hard working people I know bought about 2005 and took interest only mortgages with a 10% deposit. After paying interest regularly plus capital, they find they only have 12-13% equity as Halifax has downwardly revalued their houses.

    £8k may not seem much, but when you are reducing iyour mortgage monthly and paying rising family bills, its not as easy as it looks! Pay rises have been below expectations, too. I guess these may be the “lucky ones”!

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  • happy mondays says:

    @ mw (or anyone else with more financial knowledge than i have), if your still online, trying to get an answer about investors, dumping shares, & buying something more tangible like gold as the market is obviously fragile, Now if i was an investor with plenty of shares (cash) i would be looking to put this somewhere safe ish & something i can touch, like a house, will not these investors that are moving away from shares buy property, thus propping up the market even more ?

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  • mark wadsworth says:

    HM, your guess is as good as mine. Some weird stuff happens – japan had earthquake and Yen went up, USA got downgraded and US bonds went UP, maybe house prices will get a boost at expense of shares, it’s perfectly possible.

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  • @5, where would you buy? In central London? It might get butnt out, looted and full of squatters before you are through to exchange.

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  • 3. mark wadsworth,

    I see you are in fine form today.

    5. happy mondays.

    Some investors like liquid markets, they will buy those dips or find another (BARGAIN) elsewhere.

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  • 7. khards

    Quiet, I’d wait a couple of weeks for that to happen. 🙂

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