As most people know, it is a struggle for non-homeowners to get onto the property ladder in the present climate due to factors such as lenders demanding crippling deposits and restrictions on lending criteria. However, it seems that those who did manage to get onto the property ladder for the first time several years ago are also destined to continue suffering when it comes to getting the home that they want.
According to a recent reports, many of those who purchased their first home in 2007, just prior to the global financial crisis are now either in negative equity or do not have enough equity in their homes to be able to consider moving. It is thought that around 360,000 homeowners could be affected by the situation although there are regional variations across the country because of the level of which property prices have fallen over the past few years in different areas of the country.
Figures were released recently by HSBC with the High Street banking giant claiming that in 2007 the average house price was £160,000 and the average deposit that first time buyers were putting down at the time was 10 percent. This means that first time buyers would on average have had around £16,000 in equity to start with. However, since 2007 house price plunges in many parts of the country have resulted in this equity disappearing. Those that put down little or nothing by way of a deposit will be the ones that now find themselves in negative equity where they owe more on their property than the property is actually worth.
Tags: negative equity, property ladder, house prices, house price, global financial crisis <BR/>A spokesperson for HSBC said: “These findings highlight the fact that first-time buyers can no longer rely on rising house prices to provide them with the deposit they need for their second purchase. They need to save or make overpayments on their existing mortgage if they want to move up the housing ladder.”
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