Almost one in six UK properties backed by prime mortgages have fallen into negative equity, a new report has found.
According to Fitch Ratings, 15 per cent of loans in prime RMBS programs have fallen into negative equity, The Guardian reported this week.
Sunderland, in England’s north east, recorded the largest number of mortgages in negative equity (28 per cent), with an average of £5,947 (A$12,120).
The sharp rise in negative equity suggests increasing pain for home owners and will make it difficult for refinancing, Fitch said.
"Currently, assuming an LTV [loan to value ratio] of 75 per cent or lower is needed to remortgage at an attractive rate, 50 per cent of loans by value - and 35 per cent of borrowers - do not have enough equity to be able to do so. If average house prices fell 30 per cent from their peak then the figure is likely to rise to 62 per cent by value (and 45 per cent based on number of borrowers)," Fitch’s Alastair Bigley said.
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