2.5 million property owners could be forced into negative equity this year, according to the latest warning issued by the FSA (Financial Service Authority). For some, this means they will see their value of the home drop so sharply that they will owe much more then their house is worth.
This comes after reports that mortgage lending has slumped to an eight-year low and a third of homeowners were worried about their homes being repossessed. This is shown in the lack of confidence to borrow, as only ?9.9 billion was lent in February, compared to last year where ?25 billion was lent. This makes it the lowest amount since 2001.
The FSA reported: ?It is estimated over 2 million residential mortgage holders and 500,000 buy-to-let holders would be in negative equity.?
Tory housing spokesman Grant Shapp said that the Government needs to take responsibility: ?This Government has tragically failed millions of hard-working people who wanted to do the right thing for their families by buying their own homes. The Prime Minister must take personal responsibility for this crisis.?
The latest figures from the Council of Mortgage Lenders show that because the banks are failing to lend, despite falling house prices and low interest rate, the UK property market as a result is suffering. More bad news came from economics consultancy Fathom who warned that unemployment could go up to 3.2 million next year and 400,000 families could end up losing their homes
A survey from Which? has revealed 35 per cent of homeowners are worried about repossession. Doug Taylor, from Which?, said: ?The industry needs to demonstrate it wants to win back the trust of the public by fully embracing Government initiatives.?
