Nearly 70,000 Northern Ireland homeowners would be pushed to brink by interest rate rise, says expert
Negative equity remains a “huge problem” for about 70,000 homeowners here who would be pushed to the edge by a rise in interest rates, it has been claimed.
The concerns have been raised by Conor Devine, boss of Belfast debt advisory firm GDP Equity Experts, which has just announced it has joined up with a Bangor property firm to help thousands of homeowners and businesses tackle the problem.
As a result of the economic downturn in the property sector, Northern Ireland has the highest rate of negative equity in the UK.
It’s estimated that 68,000 homes are in negative equity here.
One young couple from Co Antrim told the Belfast Telegraph they were left struggling after property prices “dropped like a stone” little over a year after they bought their first property in 2006.
The pair were then forced to buy another property, and rent out their smaller first purchase, which they say is “still a burden on us”.
And Mr Devine says it remains a “huge problem” for families and firms across Northern Ireland.
“It’s huge, and the issue is, if you look at the macro issue in Northern Ireland in the next five years, we are in the midst of an austerity programme, and we are too reliant on the public sector,” he said.
“The issue is, wages haven’t increased, and negative equity is still there. People are saying that they don’t have disposable income.
“A lot of people have benefited because interest rates are low, but at some point they will go up and that will leave a lot of families on the edge.
“(Negative equity) can impact on people in a number of ways. There are all sorts of issues surrounding this, including mental health and the breakdown of families. People aren’t able to deal with it. We are focusing on educating people around solutions.” Speaking about the new link-up with Independent Property Estates in Bangor, Mr Devine (right) said: “They have lots of people on their books who want to sell, and to buy, including those who have negative equity.
“We can help their clients with negative equity. They are an innovative practice.”
He said there is still an “air of optimism” in the lower end of the property market, with first time buyers and other homeowners who didn’t get caught up in the property crash.
“There are people every day who, for example, bought a house for £150,000 and it’s now worth £50,000.
“All of those 70,000 people haven’t been able to move on and are stuck in a purgatory-type situation.”
Michael Rushe, managing director of Independent Property Estates, said: “We are pleased to announce that we are working in partnership with GDP Equity Experts to help provide a ‘one stop shop’ for our clients.
“Over the past few years we have seen first-hand the difficult situations homeowners and businesses can find themselves in if they are trying to sell properties that are in negative equity. We will work together to help bring about a mediated settlement.”
GDP Equity Experts is part of GDP Partnership, which provides a number of services across asset management, mediation, restructuring and corporate finance.
Case Study: First home still a burden that we carry 10 years on
We bought a small two-bed house in Portrush back in 2006. It was perfect for us because we had just got engaged and wanted to get on the housing ladder as soon as possible because prices just kept increasing and we feared we’d miss out.
However, a few months after we moved in the house prices dropped like a stone and our house was eventually worth less than half of what we paid. We were happy to stay where we were, but knew at some stage we would have to move, so began saving a little (benefiting from the drop in interest rates) to either pay off a chunk of what we owed or use it as a deposit on a bigger house.
When we found out we were expecting our second child we knew we’d struggle with the space we had so began looking at our options.
We found another house and managed to scrape together enough to secure the mortgage. Ironically, it was the massive drop in house prices that benefited us here. We still own the first property which remains in negative equity.
We found a good tenant, however, and the rent helps to cover our mortgage here, although not in its entirety.
Our first house is still a burden on us, but hopefully we’ll be able to sell it in the next few years.
Although it has caused us quite a bit of stress, I know others who have found themselves in worse predicaments.