Households face Negative Equity
By the end of 2009 experts are predicting over a million households will face negative equity as a result of house prices falling at record levels and mortgages on the rise.
House prices in the UK could fall by as much as fifteen per cent by the year end resulting in thousands of homeowners going into negative equity according to the US investment bank Citigroup.
It was only last month that house prices fell by 2.5% according to figures by Nationwide’s house price index and this was as a result of tighter restrictions from mortgage lenders. Potential home buyers are pushed out of the housing markets with these stricter conditions, with the Citigroup’s prediction of around 15% annually.
Vince Cable, spokesperson from the Liberal Democrat predicted that in April as many as three million homeowners could face negative equity over the next year.
Vince commented on Nationwide’s figures on house prices saying, "This freefall in house prices is becoming worryingly reminiscent of the Tory recession of the 1990's."
He went on to say that, "The reality is that the housing market has been seriously overvalued for some time thanks to massive consumer debt. And with falling house prices and high mortgage costs there is a real danger that many people could find themselves in negative equity and under serious threat of repossession."
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