Number of borrowers in negative equity falls by 85% in four years

12th May 2015


The number of homes in negative equity has  shrunk by 85.4% between 2011 and 2015.

There are now just over 120,500 properties which are valued at a lesser amount than the mortgage against them, according to HML, which services home loans on behalf of lenders.  In Q1 2011, this figure stood at almost 827,000.

Greater London has seen the biggest improvement in negative equity between Q1 2011 and Q1 2015, witnessing a 99.8 per cent reduction.

The East of England has also experienced a marked improvement, with negative equity declining by 90.4 per cent.

And while Northern Ireland has seen the negative equity situation worsen by 27.4 per cent between  Q1 2011 and Q1 2015, the number of properties in this situation has declined from a peak in Q1 2013.

Damian Riley, director of business intelligence at HML, said: “With the Conservatives winning the UK General Election, many in the residential property sector may see this as providing continued stability – and this could support a continued decline in negative equity.

“It is no surprise to see constituencies where house prices are increasing fastest voting overwhelmingly in favour of the Conservative Party. As a rule of thumb, in UK regions most distant from London, where house price increases lag behind the Tory heartlands, more people appear to have voted for change.

“Overall nationally, house prices continue to increase and wages in real times are rising, albeit at a modest pace – both of these factors are contributing to more people paying down their mortgage debt and reducing arrears.

“However, while rising house prices may kill off the issue of negative equity for many, those who are still in this situation should consider making mortgage overpayments where possible, particularly before a mortgage interest rate increase. History shows that whoever is in government, interest rates will have to eventually rise.

“Our advice remains the same: any customers who cannot currently afford to pay their mortgage and are worried about slipping into arrears should talk to their lender at the earliest opportunity, to give them plenty of time to find a solution that works for both parties.”

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