Negative Equity Fears for Millions

Almost 1.2 million UK homeowners could be facing negative equity if house prices continue to fall at the rate they are currently doing.

UK mortgage borrowers are facing the risk of negative equity and higher mortgage payments. The Bank of England’s Financial Stability Report (FSR) reports one in 10 homeowners could be left with their mortgage debt being more than the value of the home, due to the decrease in house prices.

About 3% of homeowners are currently in negative equity. But if house prices drop by another 15% from their record high in October 2007, this figure could sharply increase. Those who are most at risk of negative equity are first-time buyers who have recently purchased their first home.