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Negative equity should be viewed within "the broader picture"

04/07/2008

Homeowners fearing negative equity should look at the situation in the context of past price increases, an expert has said.

GE Money Home Lending has released figures showing negative equity should not be a great concern, as "equity cushions" were created when property prices hit record highs in the past few years.

An owner of an average London property bought in 1995, for example, would only experience negative equity if the price decreased by three quarters (72 per cent), according to the report.

Even houses bought with an average deposit as recently as last year are unlikely to see negative equity, as the analysis indicates a "cushion" is provided for a drop of up to a fifth.

Gerry Bell, head of mortgage marketing, GE Money Home Lending, urged homeowners "to look at the broader picture".

"Over the past decade homeownership has delivered fantastic returns for many borrowers and we would need to see unprecedented falls in property prices for the average home owner to be severely impacted," he said.

House prices have fallen by 6.3 per cent in the twelve months, according to information released by the Nationwide building society, but remain four per cent higher than two years ago.

Gas price cuts expected 07/01/2009 - Energy company Scottish Power has announced the launch of a Personal debt about £1.5 trillion 07/01/2009 - The UK’s personal debt stands at around £1.5 trillion, according British reliance on gas for energy growing 06/01/2009 - New figures suggest that Britain’s dependence on natural gas is Small business seek cap on credit cards 06/01/2009 - Credit card interest rates should be capped to help small