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Negative equity 'hitting home-move mortgage market'

By Margaret Canning

Published 25/11/2016

Derek Wilson, Northern Ireland CML:
Derek Wilson, Northern Ireland CML: "We have seen year-on-year growth in home-buying activity in Northern Ireland every quarter this year, with first-time buyers really driving that growth."

Flat borrowing figures for the local home-moving market suggest many people are locked in negative equity, it has been claimed.

However, overall mortgage activity for Northern Ireland increased between June and October, adding weight to claims that the EU referendum result of June 23 has not hit general house-buying confidence.

According to the Council of Mortgage Lenders (CML), home-buyers here borrowed £400m during the period - up 18% quarter-on-quarter and 8% year-on-year.

They took out 3,600 loans - an increase of 9% compared to the previous quarter and 3% on the third quarter of last year.

First-time buyers took a slightly bigger share of total lending, at £210m, up 17% year-on-year.

But home-movers' borrowing was steady at £190m, unchanged on a year earlier.

Niall Harkin, head of mortgage intermediary business at Danske Bank, said the first-time buyer market was rosy, but other parts of the sector gave cause for concern.

"It's clear we are experiencing growth in the mortgage market, but that growth is perhaps slower than it could be for a number of underlying reasons, and we continue to see variances across the region," he added.

"It's less rosy in the home-mover market, which is flat compared to the same period last year.

"A contributory factor, I suspect, is the ongoing problem of negative equity in Northern Ireland.

"Although the position is improving, Northern Ireland still has the highest percentage of homeowners in negative equity of any region in the UK, and it will be some time before the situation is normalised."

House prices peaked in 2007/8, with prices falling by around 60% until the market bottomed out around 2012. But many who purchased their homes in the period beforehand still owe more on their mortgages than the value of their house.

Derek Wilson, from the Northern Ireland CML, said: "This is the first period after the EU referendum vote, and it appears the Northern Irish market has remained resilient.

"We have seen year-on-year growth in home-buying activity in Northern Ireland every quarter this year, with first-time buyers really driving that growth."

Surveys have shown a slow increase in prices in the past year, with Ulster University reporting a 6% increase in the average price to £160,000. The Government's house price index - including auction sales - reported a 5.4% increase to a standardised price of £124,000.

Last year, mortgage administrator HML estimated that one in 12 households here was in negative equity.

Belfast Telegraph

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