GE Money Home Lending: Don't fear negative equity

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GE Money Home Lending: Don't fear negative equity

House prices would need to fall very far for homeowners to experience negative equity, GE Money has said.

The average London property bought in 1995 would need to devalue by 72 per cent for the owner to enter negative equity, the financial services firm found.

An average home bought in 2000 with an average deposit of £27,000 has 58 per cent equity buffer.

In Wales, house prices would have to fall 53 per cent before owners enter negative equity, and to 43 per cent in the south-east.

Gerry Bell, head of mortgage marketing at GE Money Home Lending, said that the concern over negative equity was for the "small number" of borrowers who put down a very small deposit.

He said that for the vast majority of people, the market's "historic growth" would cushion against price falls.

A report by the National Housing and Planning Advice Unit has found that falling house prices are of little use in increasing affordability to people, the Financial Times reports.

By 2018, housing will be as unaffordable as if there had never been a price drop.

The report cites population trends caused by increased longevity and migration and lower birth rates.
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