Young people 'are worried about negative equity'

16 April 2008

Many young people who have recently got a mortgage and onto the property ladder are now concerned about negative equity, a new report has revealed.

Figures released by Fool.co.uk showed that 23 per cent of people with mortgages aged between 24 and 35 are worried about experiencing negative equity as a result of falling property values in 2008.

In addition, 56 per cent said they have no plans to remortgage and move during the credit crunch and 16 per cent revealed they had already cancelled plans to relocate until the property market calms and the situation becomes clearer.

"Young people who have not experienced previous recessions are understandably worried about the property market," explained David Kuo, head of personal finance at Fool.co.uk.

"They include both those who have just bought their first house and those who want to get on the ladder, but whose hopes are being dashed by over-cautious lenders."It is important to provide as much assistance to first-time buyers because they are the lifeblood of a healthy property market."

Remortgage demand rose more highly than expected and is due to increase as borrowers coming to the end of the fixed or discounted interest period on their mortgages look to refinance with an alternative deal.

Recently, Paul Holmes, the chief executive of Firstrung, said that house prices needed to drop by around 20 per cent to encourage more young people to get a mortgage and onto the property ladder.

Source:
http://www.moneyhighstreet.com