Negative equity fears have 'dented' buyer confidence

Predictions that many homeowners are to find themselves being pushed into negative equity has put people off purchasing property, according to a mortgage advisor.

Reports of the risks involved in taking out a mortgage have "dented" consumer confidence, said spokesperson for Alexander Hall, Andy Pratt.

Mr Pratt said that this meant many first-time buyers were opting to stay out of the housing market.

He went on to say that the "conservative" view currently being taken by many was "understandable", adding that buying properties and spending money on a mortgage was "obviously a big commitment".

A report, published earlier this month by Morgan Stanley, suggested that house prices would fall over the next two years by 15 per cent, pushing one in ten homeowners into negative equity.

Mr Pratt added that "the only people that are at risk of negative equity are those first-time buyers that took out a 95 per cent loan-to-value mortgage in 2007".

News posted on 25th April, 2008