The Council of Mortgage Lenders (CML) has released first quarter figures which show that 827,000 homeowners are in negative equity. This means that the amount that they have borrowed for their mortgage is more than their house is worth. CML has said that the number of people in negative equity presently, is not nearly as high as it was a decade ago when the figure was around 1.6 million.
The majority of mortgages in negative equity are made up of people who bought their home between 2006- 2008 and first time buyers. The former is due to the dramatic price drop following the recession meaning their home is worth less now than when they bought it. This is also the case for first time buyers who tend to put down small deposits.
In 2007, house prices where at their highest and borrowing was a lot easier. Now, almost one third of ongoing mortgage loans taken out that year are in negative equity. Of the 826,000 homes in negative equity, 326,000 are first time buyers.
In contrast, the combined value of homes owned outright in the UK totals to £1.43 Trillion and in addition, over 70% of those who do have a mortgage have at least 10- 30% equity. This means that, as the value of mortgaged homes totals to £1.84 trillion, the value of unmortgaged equity is £800 billion.
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.