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| '1.2m owners' in negative equity | '1.2m owners' in negative equity |
| (about 1 hour later) | |
| More than one million homeowners are thought to be in negative equity because of falling house prices, the Council of Mortgage Lenders (CML) says. | More than one million homeowners are thought to be in negative equity because of falling house prices, the Council of Mortgage Lenders (CML) says. |
| The drop in property values left about 900,000 people with homes valued at less than their mortgage debt at the end of 2008, its research found. | The drop in property values left about 900,000 people with homes valued at less than their mortgage debt at the end of 2008, its research found. |
| But the CML warned the number may have risen to 1.18m by the end of February. | But the CML warned the number may have risen to 1.18m by the end of February. |
| It found the worst hit area was north-east England, while East Anglia and Scotland remained relatively unscathed. | |
| Sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt Bob Pannell Council of Mortgage Lenders | Sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt Bob Pannell Council of Mortgage Lenders |
| The report by James Tatch, senior statistician at the CML, suggested that about two-thirds of those currently facing negative equity faced only modest shortfalls. This amounted to about £6,000 for first-time buyers and £8,000 for other homeowners. | The report by James Tatch, senior statistician at the CML, suggested that about two-thirds of those currently facing negative equity faced only modest shortfalls. This amounted to about £6,000 for first-time buyers and £8,000 for other homeowners. |
| However, those who took out mortgages in the second and third quarters of 2007 when house prices were at their peak, were most likely to have been affected badly, it said. | However, those who took out mortgages in the second and third quarters of 2007 when house prices were at their peak, were most likely to have been affected badly, it said. |
| The CML report warned that further falls in the value of property were expected. | The CML report warned that further falls in the value of property were expected. |
| This would take the number of households in negative equity closer to the 1.5 million who found themselves in the same position at the depth of the last housing market recession in 1993. | This would take the number of households in negative equity closer to the 1.5 million who found themselves in the same position at the depth of the last housing market recession in 1993. |
| 'Erosion of equity' | 'Erosion of equity' |
| The CML study also found almost one in 10 (9.2%) of homeowners in the North was in negative equity, while East Anglia remained relatively unaffected (0.9%). | The CML study also found almost one in 10 (9.2%) of homeowners in the North was in negative equity, while East Anglia remained relatively unaffected (0.9%). |
| Scotland has also escaped the worst, with 1% suffering. | Scotland has also escaped the worst, with 1% suffering. |
| Meanwhile, the equity of 565,000 UK mortgage holders had dropped below a 5% deposit on an average priced house in their region, the study said. | Meanwhile, the equity of 565,000 UK mortgage holders had dropped below a 5% deposit on an average priced house in their region, the study said. |
| This "erosion of equity has significantly weakened the ability of homeowners to move", it added. | This "erosion of equity has significantly weakened the ability of homeowners to move", it added. |
| Bob Pannell, CML head of research, said negative equity would slow down sales, but should have few other adverse effects for the majority of households. | Bob Pannell, CML head of research, said negative equity would slow down sales, but should have few other adverse effects for the majority of households. |
| "Where people need to move house for job or other priority reasons, lenders can often be flexible to existing borrowers with low or negative equity, as long as their financial position is sound and they have a good payment track record," he said. | "Where people need to move house for job or other priority reasons, lenders can often be flexible to existing borrowers with low or negative equity, as long as their financial position is sound and they have a good payment track record," he said. |
| "Otherwise, sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt." | "Otherwise, sitting tight and building up savings or overpaying on the mortgage are the strategies most borrowers are likely to adopt." |