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One in 8 British homes in negative equity


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One in 8 British homes in negative equity

LONDON, July 5 (UPI) -- One in eight British mortgage holders who have purchased homes since early 2007 already owe more than their houses are worth, an analysis indicates.

Included in that number are 145,000 homeowners who now find themselves in "negative equity" situations, a figure that could rise to 360,000 if home prices fall by another 20 percent, The Daily Telegraph reported Saturday.

The newspaper said research done for it by CACI International Inc. (NYSE:CAI) looked at the 1.2 million people who have bought homes since the start of 2007 and calculated that one in eight are in negative equity, the most since the early 1990s when the situation was last considered acute.

"Negative equity is unlikely to be as significant a problem as it was in the early 1990s, however, for any individual it will be a tragedy," Adam Sampson, chief executive of the housing charity Shelter, told the Telegraph. "Negative equity traps people in their existing house and denies them an opportunity to exit gracefully from the housing market."

Negative equity first affects buyers who borrowed the maximum amount possible, especially those that took out 100 percent mortgages, which are worth the full value of the property.

Full story, source: UPI

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Its their own stupid fault, people where getting 110%+ mortgages, and are now surprised their home is worth less than what they're paying. if people are planning on staying in the house for more than 10/15 years everything will be ok the house prices will go back up, but if your in the housing game to make a quick profit, its tough ****. :lol:

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seems that housing bubble burst is starting to spread ?

it had to, the Government was actively encouraging people to borrow, and borrow more than they earn. anyone with a bit of matter between their ears could see what was going to happen, something had to give, and to make matters worse this government has nothing left in the pot, they never saved when times where good and now, like everyone else they're floating on a sea of debt

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Its their own stupid fault, people where getting 110%+ mortgages, and are now surprised their home is worth less than what they're paying. if people are planning on staying in the house for more than 10/15 years everything will be ok the house prices will go back up, but if your in the housing game to make a quick profit, its tough ****. :lol:

:yes:

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I know quite a few folks who are under water in their homes. I feel very lucky that I am not in that situtation. But, on the flip side, I chose to buy a house that cost me much less than what I could afford--and I mean a lot less.

If folks can still manage their payments for the next 5-10 years, even if they're underwater, they should do so if only because at some point, the housing market will bounce back. The problem in the USA is that many folks can't afford their payments now because they took out risky ARM mortgages and now (at least in the US) they'll have a hard time refinancing to a more stable fixed rate mortgage because the bank won't lend you more than what the house is worth.

I don't know mortgage laws in the UK, but these low interest ARM's are dangerous. I can't figure out why the banks made these loans. They don't really benefit when the homeowner can't pay their mortgages. I know there's a house up the street from me that was repossessed over a year ago, the bank had a sink a ton of money into it to fix it up for sale, and it's been on the market for a year now. They're asking 1.2 million dollars for it. No one is going to pay that for it... it's worth 650K tops. The bank is taking a bath. And because the bank is taking a bath, that loss will be passed on to the general public.... what a mess.

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... beware "The Redshields" who want your home and your life!

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