Home owners in negative equity

Up to 360,000 home owners who brought a property in 2007, prior to the credit crunch, are trapped in their first homes and are unable to move up the property ladder.

Those who brought homes in 2007 have been hit with a toxic combination of falling house prices and more restrictive lending practices.

A report from HSBC says that whilst many of these homeowners won't be in negative equity, they won't have sufficient surplus equity in their homes to afford a 10% deposit on a larger home, plus pay for the other associated moving expenses and stamp duty.  A key problem is the price of many "first time" properties has fallen faster than the rest of the market. 

The report highlights the fact that first time house buyers cannot rely soley on rising house prices to provide them with the deposit needed for their second property.  They will need to save or make overpayments on their existing mortgage in order to move up the housing ladder.



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