Business News - One in 8 British homes in negative equity

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One in 8 British homes in negative equity

LONDON (UPI) -- One in eight British mortgage holders who have purchased homes since early 2007 already owe more than their houses are worth, an analysis indicates.

Included in that number are 145,000 homeowners who now find themselves in "negative equity" situations, a figure that could rise to 360,000 if home prices fall by another 20 percent, The Daily Telegraph reported Saturday.

The newspaper said research done for it by CACI International Inc. looked at the 1.2 million people who have bought homes since the start of 2007 and calculated that one in eight are in negative equity, the most since the early 1990s when the situation was last considered acute.

"Negative equity is unlikely to be as significant a problem as it was in the early 1990s, however, for any individual it will be a tragedy," Adam Sampson, chief executive of the housing charity Shelter, told the Telegraph. "Negative equity traps people in their existing house and denies them an opportunity to exit gracefully from the housing market."

Negative equity first affects buyers who borrowed the maximum amount possible, especially those that took out 100 percent mortgages, which are worth the full value of the property.

Copyright 2008 by United Press International

This news arrived on: 07/05/2008

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