• Home >
  • UK property >
  • First-time buyers 'fairly safe' from negative equity
Twitter Facebook RSS FEEDS

First-time buyers 'fairly safe' from negative equity

Friday, 25 April 2008 12:00 AM

First-time buyers who purchased their property before 2007 are "fairly safe" from negative equity.

Even those who took out a mortgage at 100 per cent loan-to-value (LTV) should be able to avoid the scenario, as prices have risen consistently since this time.

Indeed, it is only borrowers who have taken out a mortgage at 95 per cent LTV or more in the last year who could now be facing a tricky financial situation.

"By my calculations, and this is consistent with some of the key commentators on the mortgage lender's side, we believe that the only people that are at risk of negative equity are those first-time buyers that took out a 95 per cent loan-to-value mortgage in 2007," said Andy Pratt, spokesperson for mortgage advisors Alexander Hall.

This represents around ten per cent of borrowers who have taken out a mortgage in the last year.

"Anyone who's taken out a mortgage before that time - even up to a hundred per cent - will actually be fairly safe because of the increase in house prices," said Mr Pratt.

However, the fear of negative equity is persuading potential buyers to remain clear of the market.

"It's certainly a dent in consumer confidence, and there are a lot of people - home-movers and first-time buyers - who are taking a conservative view and deciding to wait and see what happens, which is obviously very understandable," said Mr Pratt.

"In that sense, it's creating a little bit of activity in the market, but it's unsure exactly what's going to happen.

"I think the majority of people who are experts in the UK economy or in the housing mortgage market believe that while there may be up to a five per cent correction, they don't think it's going to be a massive correction."

Related stories

Wealthy buyers are starting to take a disproportionate share of the market. Image:Thinkstock

First-time buyers benefit from mortgage increase

Rise in approvals reflects better deal for customers with a low deposit and those aiming for cheaper properties, says e.surv.

Mortgage loan agreement contract with house keys

Number of first-time buyers increases

Over 18,000 first-time buyers secured mortgages in June – nearly a third more than in May.
Lending to first-time buyers may have increased, but so have their mortgage costs. Image:Thinkstock

Boost for first-time buyers and NewBuy

More loans available for first step on the property ladder as Halifax reveals details of mortgages for new-build homes.

First-time buyers receive the keys to their property

New 95% mortgage launched for first-time buyers

Principality’s Assisted First-Time Buyer deal allows families to use their savings to secure mortgages for relatives.
The top place for first-time buyers is Milton Keynes. Image:Wiki

Top property hotspots named for first-time buyers

Milton Keynes leads the way on to the property ladder, according to research by Experian.

Young couple looking in estate agent's window

More towns affordable for first-time buyers

But the North-South divide is as evident as ever, with just eight per cent of southern areas being affordable for first-time buyers.
A place on the property ladder is getting even more distant for today's young people. Image:Thinkstock

Survey reveals average age of first-time buyers

Would-be owners have to wait up to eight years longer depending on where they live, say Clydesdale and Yorkshire Banks.

 First-time buyers at negative equity risk

First-time buyers at negative equity risk

First-time buyers at negative equity risk
Six per cent say they are relying on winning the lottery to get on the housing ladder. Image:Thinkstock

First-time buyers expecting to wait until they are 37

Home hunters expect a long wait to buy their first home and four out of ten have given up on owning, says MoneySupermarket.com.

 Houses on a hill in Bath

Mortgage-lending on the up for first-time buyers

The number of loans granted to house-buyers increased in April, with a particularly substantial rise for FTBs.

Search property

Headlines

Directory

Alaris

Alaris Logo
Alaris specialise in quality Bathrooms and Kitchens along with many other unique products for your home. The range of kitchens, kitchen worktops and bathrooms is extensive and the highest quality so you are sure to find what you want. New bathroom furniture, bathroom suites, taps, showers and cabinets are added regularly.

Bathrooms365

Bathrooms365 Logo
Bathroom365 supply all areas of your new bathroom - leading-edge designed bathroom suites, stylish bathroom taps and showers, all styles and forms of shower enclosures and a vast collection of bathroom furniture.

Fitmykitchen

Fitmykitchen Logo
Fitmykitchen are specialist suppliers of kitchen appliances, sink taps, waste bins and furniture. So whatever you want from kitchen sink taps to waste bins look no further than fitmykitchen, UK, the specialist suppliers of kitchen appliances, stainless steel sink taps, waste bins and kitchen furniture.

MyStampDuty

MyStampDuty Logo
We help people buying property all over the UK to minimise Stamp Duty Land Tax on residential and commercial property. If you are looking at purchasing a new home or business premises over £500,000, contact us today by completing the form on the right

Oak Furniture Land

Oak Furniture Land Logo
For hardwood furniture, including Solid Oak, Mango, Mahogany, Sheesham, Acacia, Ash and Birch, look no further than Oak Furniture Land.

Rated People

Rated People Logo
Whatever type of home improvement or garden remodelling project you have, Rated People can help you to identify the right tradesmen for the job in a way that is quick, easy, convenient and, as it is based on real-life recommendations, trustworthy.

Residential Land

Residential Land Logo
If you are looking for short or long term rentals in Central London, Residential Land have a portfolio of over 1200 flats and houses in the best postcodes across the Capital.

Simply Bedrooms

Simply Bedrooms Logo
Simply Bedrooms, a part of Sleepwell Bedrooms Ltd, supplying quality beds, wardrobes, sliding door wardrobes and bedroom furniture at low prices and great service, London and Home Counties Specialists.

Door Handles UK

Door Handles UK Logo
Door Handles UK is the UK's largest online range of Door Handle accessories, Door Hinges, Locks and Latches and so much more and all at genuine internet prices. We have a wide range of Chrome, Brass and Glass Crystal Mortice door knobs in both traditional and contemporary designs, whatever your taste and budget you will find a design to suit.

Woodlands Furniture

Woodlands Furniture Logo
We are an established family business situated in rural Herefordshire specialising in beautiful handcrafted classic reproduction furniture. Our comprehensive ranges are readily available from stock.

WowBBQ

WowBBQ Logo
Welcome to the World of Weber. We are the largest independent online Weber BBQ retailer in the United Kingdom. WOWbbq.co.uk is a Weber Partner Store and can give you the best advice for all your Weber BBQ needs.

Join our directory aboutproperty.co.uk

Twitter

Join the conversation at #aboutproperty

Directory articles

What do you need to consider when buying a mattress?

If you looking for a new mattress, you need to get the decision right, as getting it wrong could impact on your overall health and wellbeing. As well as comfort and size, you also need to consider other points, such as any health issues you may have.

FAQs about commercial stamp duty

If you want to relocate to larger premises, you need to know about commercial stamp duty. Different rates apply than with residential property, however, like residential buyers, you could potentially benefit from stamp duty mitigation.

Save space with a small bathroom suite

Most people dream of having spacious bathrooms with a freestanding tub and a separate shower cubicle where you can relax in pure luxury. However, the reality is that bathrooms are rarely as big as we'd like them to be. Here are some tips on how to make the most of a small bathroom.