You are here: Home - Mortgages - Buy To Let - News -

Negative equity prisoners down 13%

Written by:
The number of borrowers in negative equity has dropped by more than 100,000, or 13%, since Q1 2011.
Negative equity prisoners down 13%


The toal number of borrowers with mortgages equal to more than their property’s current value has fallen from 827,000 to 719,000 in that time according to the Council of Mortgage Lenders (CML).

In the CML’s latest News & Views, it said the 13% figure is measured against the Halifax house price index.

Recent analysis by the FSA indicates that calculations based on the Nationwide house price index would suggest that only around 5% of borrowers taking out a loan since 2005 would now be in negative equity.

The CML said: “Given the sensitivity of findings on negative equity to the choice of index used, our analysis based on the Halifax [House Price Index] could be seen as a “worst case” estimate. Perhaps, therefore, it would be better to pay more attention to the overall improvement in levels of housing equity, rather than the numbers produced using different indices.

“Since house prices started to fall in 2007, different parts of the UK have experienced significantly different price movements. At one extreme, prices in Northern Ireland are now less than half of the 2007 peak. In London and the south east, however, prices have been much more resilient.”

The CML also reported the proportion of first-time buyers who have taken out loans since 2005 and are in negative equity has declined from 26% to 20%. It also found that 90% of all borrowers who have taken out loans since 2005 hold some equity in their property, with more than half owning at least 30% of the value of the property and more than 80% holding an equity cushion of at least 10% of their home’s value.

The CML said house price movements have reduced mortgage borrowers’ housing wealth to £1,850bn, down from £2,100bn in 2007. The amount of unmortgaged housing equity held by borrowers remains broadly unchanged since last year at around £800bn, equating to an average Loan to Value of 56%, reported the CML.

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Tip-offs to financial regulator up 276%

Incidences of whistle-blowing to the Financial Services Authority (FSA) have increased markedly since the onset of the financial crisis four...