THOUSANDS of first-time buyers are being forced to pay out sky-high mortgage rates because negative equity has trapped them with their current lender.
The new buyers, who purchased their houses with 100pc mortgages, are now unable to switch to a cheaper lender because they have no equity built up in their homes.
They have been hit by a double whammy -- stuck with high repayments and a house worth less than the price they paid.
Those who took out 100pc mortgages have probably seen about €50,000 each wiped off the value of their homes.
The relentless fall in house prices since the start of 2007 has resulted in many of these people finding themselves in negative equity. This is where the value of the mortgage is greater than the value of the property.
As many as 40,0000 new buyers could be in negative equity, according to recent calculations by stockbroking firm Davy. This calculation was based on first-time buyer house prices falling by 10pc in the past year. In the past year alone, first-time buyer houses have fallen by 9.4pc.
The Indo
Monday, July 28, 2008
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