Recent numbers showed a very dark scenario for the owner insurance market this year. Researches show that an impressive number of 2.5 million homeowners (2 million residential mortgage holders and 500.000 buy-to-let holders) in the country will face negative equity. This prediction means that one in four homeowners will experience the value of their properties dropping until they will worth less that the amount they owe. Specialists say that this is another important stage in the developing of the crisis catapulted by the market last year.
Mortgage lending declined to the lowest numbers since 2001. During February, just £9.9 billion was lent, which is down 60% from the same period a year ago. In addition, one third of homeowners (35% according with one study) is already said to live in fear of repossession.
Despite such very dark forecasts, the owner insurance market experiences at least one good news. Official house price data shows that average values rose by 0.2% during January, while detached homes rose by nearly 5%. However, there are already some forecasts that suggest property prices are likely to fall another 55%, causing the owner insurance market to experience another impact. Other studies say that unemployment level may reach 3.2 million people within the following months, causing more than 400.000 families to actually lose their homes.
On the other hand, there are specialists who remain skeptical about negative equity, saying that this is only a problem for those who actually have to sell their houses. For those who are not being forced to sell their houses, they recommend to just sit tight.