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October 31, 2012

Fall in negative equity households

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by Gill Montia

Fall in negative equity households

The number of UK households in negative equity has fallen over the last 18 months, according to the Council of Mortgage Lenders (CML).

New figures from the lenders’ body show that:

1. The amount of unmortgaged housing equity held by borrowers remains broadly unchanged since last year at around £800 billion, despite the weakness of house prices in the intervening period.

2. For mortgage borrowers, the level of equity compared to outstanding mortgage debt currently equates to an average loan-to-value ratio of 56%.

3. The number of borrowers in negative equity has declined by more than 100,000 since the first quarter of 2011, from 827,000 to 719,000.

4. The proportion of first-time buyers who have taken out loans since 2005 and are in negative equity has declined from 26% to 20%.

5. Around 90% of all borrowers taking out loans since 2005 hold some equity in their property, with more than half owning at least 30% of the value of their homes and more than 80% holding an equity cushion of at least 10%.

Regarding house price movements since the early part of last year, the CML points out that the value of the typical home has barely changed, having declined by 0.3% according to the Halifax index and risen by 0.9% using the Nationwide measure, albeit with significant regional variations.


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