Negative equity 'looms large' for FTBs

John Charcol has issued an ominous warning to first-time buyers (FTBs) over the prospect of negative equity.

The mortgage broker said that people seeking to get on the property ladder would be well-advised to wait and ensure that property values have bottomed out before making an offer.

It noted that owner-occupiers who buy at the beginning of a downturn in the property market face the unenviable prospect of negative equity - paying off a mortgage that exceeds the value of their home.

"First-timers should reconsider very carefully if this is the right time to buy, given that properties in many areas are expected to lose value," asserted Katie Tucker, of John Charcol.

She added that loan-to-value ratios were also falling, placing a greater burden on prospective homeowners to stump larger deposits.

Capital Economics today warned that Britain faces an even more-dramatic house price crash than witnessed in the US, citing spiralling debt levels and worrisome economic indicators.

News posted on 20th March, 2008