Threat of negative equity 'is small'

By Jonathan Dawes, Fri 25 Apr 2008 - Published in Mortgages

Only a small proportion of people who have taken out mortgages in recent years will be at risk of negative equity, an expert has claimed.

Andy Pratt, a spokesperson for independent mortgage advisers Alexander Hall, said that the only people at risk of negative equity are those first-time buyers that took out a 95 per cent loan-to-value mortgage in 2007.

He pointed out that this is in fact less than ten per cent of all new borrowers from last year.

"Anyone who's taken out a mortgage before that time – even up to a 100 per cent [mortgage] – will actually be fairly safe because of the increase in house prices," said Mr Pratt.

Research released earlier this month by Morgan Stanley suggested that house prices will fall by some 15 per cent over the next two years. This would push around ten per cent of all homeowners into negative equity.

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