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Property: 60,000 Northern Ireland homeowners trapped in negative equity

By Jamie Stinson

Published 24/04/2015

Around 60,000 homeowners in Northern Ireland are trapped in the straitjacket of negative equity, new figures show
Around 60,000 homeowners in Northern Ireland are trapped in the straitjacket of negative equity, new figures show

Around 60,000 homeowners in Northern Ireland are trapped in the straitjacket of negative equity, new figures show.

The average shortfall if the homeowner was to sell up would be around £68,000, according to Negative Equity NI.

After the property bubble burst, many people who bought at the peak of the market between 2006 and 2008 saw the value of their home tumble. Prices here fell around 55% from the market's high point. They have since begun to rise, but slowly.

Negative equity affects around 40% of homeowners here, with areas including Omagh and Dungannon hit hardest.

Negative Equity NI estimated it would take homeowners around 15 years to recoup the losses on their properties. According to Royal Institution of Chartered Surveyors data, house prices are set to increase by just 4% this year.

In the latest figures from the Office for National Statistics, Northern Ireland saw an increase of 7.2% - the biggest annual rise in more than seven years. But the average house price was £152,000 - 43% below their peak in 2007.

Phil Davison, from Negative Equity NI, said: "From our research, we estimate the average level of negative equity per residential property in Northern Ireland stands at just under £70,000, and across the country, around 60,000 people are in negative equity.

"Not all of them will have an issue - they may be able to afford to sit tight and weather the storm. Others need to move because their family has grown or they've got a new job, and they face being followed around with a hefty shortfall on their mortgage.

"To put that in context, if you owe £200,000 on a property that's now only worth £100,000, a straight sale would still leave you owing £100,000. Plus, time is money. In this case, the average mortgage term is 25 years. That's a long time to keep paying for something you no longer own."

Mr Davison added there was a particular problem with interest-only mortgages.

He said: "If you're on an interest-only mortgage, have no repayment plan in place and do nothing you are paying the interest on £200,000 over 25 years and still owe £200,000, putting the ultimate cost of the property at £400,000, regardless of its worth.

"Interest-only mortgages are something we are seeing more of, and they will be the bigger story over the next few years."

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