The downturn in property prices has left one in five home-owners with insufficient equity to move up the property ladder, according to new research from haart estate agents.
Online PR News – 11-July-2009 – – Haart’s findings revealed that 18 per cent of prospective sellers cannot move because it would leave them without funds for a deposit on their new home.
“We have found that many couples starting a family are stuck in a one-bed flat because they cannot afford to move out,” said haart Chief Executive Paul Smith. “The same goes for friends who bought together and now want a place of their own or couples who have split up.
“Even if they do have enough equity to sell, they can’t find a 10 or 15 per cent deposit for their next home, so they are stuck in a house-move trap.”
The research was conducted during property valuations by haart estate agents, the largest independent agency in the UK. Although recent data shows mortgage lending is increasing, Mr Smith is calling for the reinstatement of higher loan to value mortgages.
He said: “We are starting to see light at the end of the tunnel and home-owners are now seeking our expert help to look at ways of getting out of the negative equity hole they are in.”
According to the Bank of England, 1.1 million homeowners are in negative equity, the same as the peak of the 1990s recession. Although house prices have fallen by 20 per cent, they have shown a steady average increase nationally over the past three months.
Mr Smith added: “One aspect home-owners should consider is overpaying their mortgages if they have sufficient funds, given that mortgage rates are still relatively low. As the market improves, they will be in a much better position to move on.”
The research from haart was revealed just as the Bank of England announced that UK homeowners have paid back a record £8.1 billion on their mortgages in the first three months of this year, taking advantage of low interest rates to start paying off their home loans.