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Archive for Negative equity

Mixed feelings in the Housing Market

Tuesday, August 5th, 2008

It’s been a turbulent year so far on the housing market, with Nationwide reporting prices showing their biggest annual fall since 1991, the year of Nationwide’s first survey.

The average home has now dropped by £17,000 in the last year, according to Nationwide – bad news for anyone hoping to sell and re-buy using equity in their home: The equity may just not be there any more.

Homeowners who took out interest-only or 90% or greater home loan deals are particularly at risk of losing everything if they fall behind on loan repayments. Those who need to sell up and were banking on rising prices to give them equity for a new home are having to stay put or face negative equity.

Fionnuala Earley, Nationwide ‘s chief economist said: “The weakening economy and poor housing market sentiment do not suggest that the market will recover quickly.”

However, the National Housing Federation has said that it expects house prices to rise by 25% by 2013, due to the lack of new houses being built. Demand is expected to outstrip supply in a few years, pushing prices back up.

In the meantime, economists are predicting that the Bank of England will be forced to cut the base rate as a means of curbing inflation, as fuel and food prices continue to rise.

Posted in Borrowing, Consumer Credit, Equity release, Financial news, Homeowner Loans, Homeowners, House buying, mortgages, Negative equity, Property, Remortgaging, Secured loans, UK Finance | 1 Comment »

House price crash finally here?

Friday, January 18th, 2008

This is probably a burning question for most of us out there since our house is not only a roof over our head but also the largest investment we will probably ever make.

Up until 8 months ago it appeared as if the house price boom would never end with over a decade of record breaking growth in house prices.

However more recent figures coming out in the past two months paint a gloomier picture. If you are a mortgage holder then this could be a cause of great concern as you may end up owing more on your home loan than the value of your house: i.e., negative equity.

Meanwhile the US has seen a decade of growth starting to turn and house prices in many areas of the US are falling as the global credit crunch takes its first victims. Right now in the US there is a record number of mortgage defaults and this is going to start having an effect on us here in the UK as the cost of borrowing goes up.

The Royal Institution of Chartered Surveyors (Rics) has said that nearly half of its surveyors saw price falls in December, the worst figures since late 1992.

Interest rate rises and a tightening of lending criteria are thought to be the main causes of the market drop, with lenders reporting a drop in loan approvals.

The Halifax and Nationwide also reported seeing a weakening of the property market, and recent Government data from

“The housing market is clearly feeling the pinch from the credit crunch and the round of interest rate hikes in 2007,” said Rics spokesman Ian Perry.

Posted in Borrowing, Consumer Credit, Financial news, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, Inflation, interest rates, mortgages, Negative equity, Property, Remortgaging, Secured loans, UK Finance | No Comments »

British lack knowledge about personal finances

Thursday, November 8th, 2007

According to the latest research from Abbey most of us here in the UK don’t know much about our own personal finances.
In a survey of more than 1000 British adults a 10 question personal finance exam was set with a grading system similar to that of the GCSE standard. Questions on the survey ranged from credit card interest, secured loan repayments and negative equity.

One in ten Britons had deficient knowledge of their own personal finances scoring below a C grade. 25 percent achieved an A*, 30 percent scored A and 21 percent scored a B.  The remaining 24 percent who scored below a B grade are in danger of making bad financial decisions due to their lack of information.

A bank spokesman claimed that the questions chosen were ones that Abbey felt everyone who has a current account should be able to answer. The hardest questions on the survey are related to pay back time of credit card balances before fees could be charged, which is 6 weeks in case you are wondering. Almost half of those surveyed did not know what negative equity meant and possibly the most worrying of all was that 23 percent of us are unaware that non-repayment of a secured loan could possibly lead to losing the house the loan is secured against.

So before you go and get yourself a loan make sure you understand all the terms and conditions. Otherwise you could be in for quite a shock.

Posted in Banking, Borrowing, Consumer Credit, Credit Card, Debt management, Financial news, Negative equity, Personal debt, Personal loans, Secured loans, UK Finance | No Comments »

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