Don Kenobi
/ 83.5.251.* / 2009-06-23 14:27
One in 10 borrowers with an excellent credit record are trapped in negative equity, owing more on their mortgage than the value of their homes, says a report that forecasts a peak-to-trough fall in house prices of up to 35 per cent.Negative equity thumbnail
Tuesday’s report by Fitch Ratings, which is based on loan information from 2.7m borrowers, found the highest concentration of negative equity was in Northampton, where 17 per cent of borrowers were under water.
There, nearly a quarter of all loans by value were secured against property that was worth less than the sums owed.
Lenders with the highest levels of borrowers in negative equity included Northern Rock, which was nationalised in 2008, Bradford & Bingley, also rescued by the government, Birmingham Midshires, which is part of HBOS, and Alliance & Leicester, owned by Santander, the Spanish banking group.
In its report, Fitch said negative equity could rise to 23 per cent of all borrowers and to a third of all loans by value if its forecast of a peak-to-trough decline in house prices of 30-35 per cent was correct.