Free equity could cushion homeowners

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Free equity could cushion homeowners

Wed 9th Apr 2008

The majority of homeowners have enough unmortgaged housing wealth to see them through any changes to their circumstances or the housing market, the Council of Mortgage Lenders (CML) has said.

Unmortgaged housing equity now totals nearly £2.5 trillion, over twice the value of mortgage balances outstanding, after trebling in the last decade.

It has risen to such high levels that the organisation believes that "even if house prices fall by five per cent this year, there will be only a modest impact on overall levels of housing wealth".

By the end of 2008, it predicts, free equity held by homeowners will account for 68 per cent of total housing wealth.

Although the CML accepts that the position of homeowners varies considerably, it also argues that the majority will have enough free equity stored to see them through any difficult times in the property market.

That may come in handy at the moment, with UK house price growth slowing to its lowest level for 12 years.

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