A Third Of Homeowners Unable To Move Due To Loan
Although there have been definite signs of improvement in the housing and homeowner loan markets over the course of the past couple of months or so, somewhere in the region of a third of all homeowners with a homeowner loan, approximately 3.5 million different households, are still unable to move house due to the outstanding loan secured on their property, according to a new survey which has been published by John Charcoal, the UK’s largest mortgage and homeowner loan broker.
The survey has shown that around 2 million homeowners are either in a negative equity situation with their outstanding loan against value of their property, or have equity of less than ten per cent and a further half a million homes only have equity of between 10 and 15 per cent above the outstanding loan balance.
In addition to the problems faced by these homeowners, a further 1 million homeowner loans have been issued on a self certification basis, or as a sub prime or bad credit loan. As this type of loan deal has all but disappeared from the market place, along with high loan to value products, it would be extremely difficult for borrowers in either of these situations to be able to move house, unless they had access to substantial funds elsewhere to meet lenders’ currently low loan to value criteria.
Ray Boulger of John Charcoal said “When most people move, they rely on the equity in their property to provide the bulk of the deposit required for their new property, which is currently a minimum of ten per cent in most cases, plus moving costs, of which stamp duty land tax is often the biggest. Having such a large number of households who are currently unable to move is not only a serious problem for the people concerned, but also for macro economic consequences.”
