Negative equity 'could double'

Homeowners looking for cheap mortgages have been warned that the amount of houses in negative equity is set to increase.

Analysis by Homeloan Management Limited revealed that if house prices fall by another ten per cent the number of households plunged into negative equity could double, bringing the total to 1.7 million.

Paul Holmes, chief executive officer of Firstrung, said that the statistics are quite frightening and added that the situation could get much worse.

However, he claimed that as interest rates are low and mortgage repayments remain affordable, negative equity may not be the most pressing concern for homeowners.

"It is not the end of the world. A house is a house. You've paid £150,000 - it is now worth £140,000 but you can afford the mortgage and [if] the mortgage is less than the equivalent rent that you'd pay a private landlord, then I fail to see the issue," Mr Holmes said.

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2011-09-19 13:04:36 © Moneyextra.com