New Data from Council of Mortgage Lenders
The Council of Mortgage Lenders has just released new data concerning mortgages that may have homeowners in a panic. It seems that more than 23,000 people in the UK owe lenders because of the housing price changes. Most of the mortgages for these individuals were hundred percent mortgages, and with the housing prices dropping on the sales of homes the value of homes in the UK are dropping.
The 23,000 individuals who are affected took out their mortgages by March 31 2008. They were all hundred percent mortgages to start will, and with the falling housing values they have a negative equity in their homes.
The latest data from the Land Registry is showing East Lancashire, except for Ribble Valley has seen a drop from the first quarter in housing values. The total in the Lancashire district has been 5.5 percent drop in housing values. The average property that is detached is going for 290,500 pounds, semi detached is 159,000 pounds, and the terraced house is 102, 700 pounds.
Graham Ireland a partner in the East Lancashire Law firm of Haworth and Nuttall has stated that the property values are going to continue to drop and those who have 100 percent mortgages could be facing negative equity for the next year or so. What this means is that the property owner has more in the house than the value which means they are ending up owing the bank more money.
Mr. Ireland and others are trying to stem the panic, by urging everyone to remain calm. While the current housing prices are low if the person has just obtained their loan they shouldn’t need to sell the home, which means they will have time to build up equity in the homes.
Numerous lenders were providing the 100 percent mortgages and sometimes more than that even though the buyers couldn’t necessarily afford the rising prices. With the fact that the values are changing a lot of the lenders are taking the 100 percent loans off the market so that they don’t get into this negative equity situation with the buyers.
The credit crunch is the leading cause of these changes in the market. Many lenders will probably keep changing the products that are on the market at the moment to make it more conducive for their lending. They have for the last several months placed more restrictions on the mortgages.
At the moment many homes are worth less than the UK residents paid for it, however this can change. Those who need to sell will have difficulty because of the more expensive loans and the need to drop the value for the buyers to afford it. However, if you don’t need to sell then you are in a stable position to wait and see what the housing prices will do in the next couple of years. Repossessions may increase for those who can’t afford their homes. In this case it would be those who can’t make the repayments due to adjustable rate mortgages.
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