Risky mortgages put thousands of borrowers at risk of negative equity

Low deposit mortgages could put thousands of house buyers in danger of falling into negative equity, according to figures from the Bank of England. Almost 20% of mortgages lent in Q1 of 2019 were given to a borrower who paid a deposit of under 10% - the highest level since the end of 2007, before the global financial crisis. If lending continues at its current rate, it means that more than 100,000 of these risky home loans will be issued this year. It also means that growing numbers of borrowers are exposed to a sharp fall in property prices which could wipe out all their equity. “Soaring demand for high loan-to-value mortgages is alarming, especially as house price growth is slowing and interest rate rises over the next five to ten years look very likely,” commented Justin Modray, from Candid Financial Advice.

Daily Mail (12/07/2019)