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Staggering figures show that homeowners in the North East will remain in negative equity for up to five years

New figures released by the estate agents Countrywide has found that 6% of first-time buyers who bought their property in 2007 continue to be in negative equity, with the North East worst affected.

This means that a staggering 22,000 first-time buyers live in a property which is worth less than the value of the loan, with many analysts stating that the situation is unlikely to change for many years.

The North East was the worst affected, with 53% of first-time buyers still in negative equity after purchasing their property in 2007. In addition, those properties that are no longer classed as having negative equity only hold equity of less than 5%.

Countrywide said that the figures show that many borrowers, especially in the North East will still find it hard to move up the housing ladder, although they reiterated that the national figure of 6% was 15% down from last year’s figures.

Nigel Stockton, a financial services director at Countrywide, said: “Despite the largest fall in house prices for 25 years, across most of the country the number of first-time buyers who bought at the peak of the market and still find themselves in negative equity is low, which is good news. For the average household in southern England homeownership has proved to be a solid investment even over a period where house prices have fallen.”

He added, “In parts of northern England the story is different and a significant number of first-time buyers still find themselves in negative equity,

“While the number of homeowners in negative equity is falling, it is doing so at a much slower pace than compared to the south of the country, with negative equity reduced though mortgage repayments rather than house price growth. If the current trend continues it could be five years before negative equity loosens its grip on first time sellers in parts of Northern England.”

Picture: mearlybrice

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