Negative Equity
With property prices falling by around 6% in recent months more people than ever will be facing the spectre of negative equity ie paying more for their mortgage repayments than the property is worth on the open market.
This is especially for people who took out 100% and large value mortgages during an inflated property market and bought outside the usual hot areas. New build flats and houses are not looking such as great investment in the light of recent developments as these are the first lose value and can even ‘depreciate’ after the initial burst of interest in new property developments.
The Royal Institution of Chartered Surveyors (Rics) have recently stated that over 23,000 borrowers now face negative equity by 6% to 10%, this is a 15 year high.
Just for the record the average cost of a home in England in April 2008 was £226,194, in Wales it was £164,994, in Scotland £165,546, and in Northern Ireland the average value was £224,664.
England is around 5% down, scotland is slightly down and NI is holding steady after recent rises causing a boom in the market.
When the lenders and government sort out the credit crisis this will all change, the cost of an average mortgage is up almost 7% with many of the attractive packages enjoyed in recent years.