Are FTBs At Risk Of Government Induced Negative Equity?

According to new data, the Government’s Help to Buy scheme has hugely overheated resulting in massive profits for the big house builders that have taken advantage of the scheme. However, a collapse could leave hundreds of thousands of homeowners in negative equity. The average first-time buyer house price is £236,000, however, those buying through the Help to Buy scheme are forking out a staggering £298,927 – a different of £62,927. This deficit has been increasing each quarter and the now leaves many in danger of negative equity should the housing bubble burst and prices plummet. Read more on the Property Reporter website.

https://www.propertyreporter.co.uk/finance/are-ftbs-at-risk-of-government-induced-negative-equity.html

Britain 'Is On The Brink Of The Worst House Price Collapse Since 1990s'

House prices are teetering on the brink of a crash that could be as bad as the bust of the early 1990s, a leading expert has warned. There are already warning signs that prices are heading towards a near 40 per cent plunge, warns Paul Cheshire, Professor of Economic Geography at the London School of Economics. It raises the alarming spectre of the return of ‘negative equity’ – when a house falls so far in value it is worth less than the mortgage – which hit one million people at the worst point in the 1990s. Read more on the Daily Mail website.

Irresponsible Lending In The UK Could Lead To Return Of ‘Negative Equity’

TSB has reduced mortgage lending to first-time buyers, especially in London, amid growing concerns that many homeowners without significant equity in their homes could soon find themselves in ‘negative equity’ as a result of falling house prices, particularly in the capital. In what may be an eerie echo of the start of the financial crisis, TSB’s chief executive Paul Pester has warned that many lenders in the UK are being reckless by providing property buyers with cheap loans that they may not be able to afford, especially when interest rates eventually rise, at a time when home prices are starting to look increasingly vulnerable. UK house prices fell for the second month in a row during April, according to the Nationwide. Read more on Property Investor Today.

Homebuyers Wobble In Wake Of Brexit Vote

Homebuyers spooked by the UK’s decision to leave the EU are pulling out of deals or attempting to renegotiate prices, according to property professionals, as the housing market suffers Brexit vote aftershocks. One property developer in central London, which had offered a “Brexit clause” allowing nervous buyers to pull out of deals in the event of a leave vote said it was allowing buyers to withdraw and keep their deposits. Consulting group KPMG has forecast that prices could fall by 5% outside London, and more in the capital, while commentators said a slowdown in sales which started ahead of the referendum was likely to continue. Fearful of landing in immediate negative equity, some buyers have decided to put their purchases on ice. Read more on the Guardian website.

UK Housing Market Is Dysfunctional

The UK housing market is "dysfunctional" and building more homes will fail to solve the problem on its own, a key industry figure has said. Bob Pannell, chief economist of the Council of Mortgage Lenders (CML), said that activity in the market was "sluggish". He argues that sales levels were the same as in the mid-1990s. At that time, many people were facing negative equity and the stock of homes was much smaller, he said. Reforming areas such as property tax would help, Mr Pannell said, alongside building more properties. Read more on the CML website.

Shrinking Help to Buy Deposits Spark Negative Equity Fears

First time buyers and home movers are scraping together increasingly smaller deposits to buy a house through the controversial Help to Buy scheme, new research shows. The Mortgage Advice Bureau (MAB), which represents hundreds of UK brokers, said the average loan to value (LTV) for buyers using the mortgage guarantee element of Help to Buy, which provides Government guarantees for high LTV mortgages, rose to a record 94.4pc in the three months to June. It went up from 94.1pc in the quarter to May and 92.6pc in the first quarter of 2014. This was close to the maximum 95pc LTV available through the scheme.  The data raise concerns that if house prices fall sharply, more people will be at risk of falling into negative equity. Read more on the Daily Telegraph website.