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Negative equity threat for 2 million UK households

The FSA has today issued a statement suggesting that more than 2 million UK homes will be in negative equity within the next 12 months. As well as the 2 million UK homes the FSA also believes 500,000 buy-to-let investors will also sample the harsh reality of negative equity placing more and more pressure on the housing market and financial well-being of millions of people around the UK.

The figures suggest that one in four UK homes, which have outstanding mortgages, and more than 50% of buy-to-let investors will need to supplement proceeds raised from any sale of their properties to pay off their mortgages. The situation looks likely to get worse before it gets better and those in negative equity may have to wait some time, until the UK property market recovers, before they can even contemplate a sale or remortgage of their property.

Negative equity is very much like the silent assassin in that it creeps up on you and before you know where you are it has hit you hard. Obviously, the more people who fall into negative equity and experienced severe financial distress the more likelihood they will default on any loans and debts they have which could lead to further write-offs by the UK banking industry. However, at least the banks of taxpayers to fall back upon!

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