Negative Equity may cause Divorce Rate Decline

Credit crunch financial woes, debt problems and negative equity worries means that the number of divorces in the UK could potentially fall, according to Consilium Financial Planning Ltd.

Managing director, Kevin Morgan said that the problem would be that “equity” in a marriage is property, which therefore becomes a problem if their the marital home is in negative equity. It may lead to a divorce rate decline because “If it can’t be sold, it’s substantially more difficult to release funds.”

According to the Office for National Statistics, the divorce rate is now at its lowest since 1984, with 2006 records showing that  divorce rates for men and women under 40 have fallen the most. Negative equity may cause the divorce rate to decline even further as it sparks more couples try to work through their differences as remortgaging their home becomes almost an impossibility.