According to a recent report millions of homeowners in the UK could see themselves plunged into negative equity over the next year, where their mortgage on their home will exceed the value of the property.
Negative equity is a term that has not been widely used for the last ten years, as a result of house prices in the UK rocketing to astonishing levels, leaving homeowners with plenty of equity in their homes rather than being in negative equity.
However, industry officials claim that all this is due to change. The report claims that around three million homeowners could find themselves plunged into negative equity by next April.
An MP from the Liberal Democrats said that the figure, which was predicted by city analysts, was a ‘highly plausible’ one. With the doom and gloom relating to house prices due to get worse, this could leave people facing a similar situation as in the early 1990s, where many found themselves in negative equity.
Many lenders have scrapped their cheaper mortgage deals in light of the global credit crunch, and recently the range or mortgage deals dropped by an amazing 10% in the space of just twenty four hours.
In total it is estimated that the range of mortgages has fallen by 70% since last summer, when the credit crunch began to take hold in the UK, and this has made it difficult for consumers to get cheap mortgage deals.
In addition to this house price growth ash plummeted, and is set to continue to do so, with some industry professionals even predicting that house prices in parts of the UK could actually tumble by up to 20% over the next two years.
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