Nine in 10 recent mortgaged homebuyers are concerned that housing market changes could reduce the equity in their property, research from Boon Brokers reveals.
The survey of 1,000 people who purchased with a mortgage during the past five years finds 91% have some level of concern, including 47% who are very or extremely worried.
Some 44% believe they are likely to enter negative equity during their current mortgage term, although this reflects buyers’ expectations rather than an assessment of their actual property values or mortgage balances.
The findings reveal a marked disconnect between present confidence and expectations for the future: 58% believe their home has increased in value since purchase and only 17% think it has fallen.
YOUNGER BUYERS FEAR GREATER RISK
More than half of buyers aged between 25 and 34 believe entering negative equity is likely during their mortgage term.
The proportion stands at 51% among those aged 35 to 44 before dropping to 26% for buyers aged 45 to 54, 21% for those aged 55 to 64 and 15% among respondents aged 65 or over.
Boon Brokers says its research does not establish the reasons for these differences but suggests younger homeowners perceive themselves as more exposed to future market movements.
LONDON CONCERNS LEAD MAJOR CITIES
London recorded the highest perceived risk among the cities examined, with 51% of respondents believing negative equity is likely.
This compares with 49% in Nottingham, 48% in Birmingham, 35% in Manchester and 27% in Leeds.
More than half of London respondents are very or extremely concerned that market changes could reduce their equity, while just 5% report having no concern.
REPAYMENTS REMAIN BIGGEST SINGLE WORRY
Higher mortgage repayments are the most frequently identified individual housing market concern, selected by 33% of respondents.
Negative equity follows at 24%, with falling property values at 14%, difficulty remortgaging at 11% and problems selling at 9%.
When negative equity and falling values are combined, equity-related worries account for 38% of responses.
Gerard Boon, Managing Director and researcher at Boon Brokers, says: “These findings outline that younger homebuyers today are thinking far beyond simply getting onto the property ladder.
“They’re considering how future market conditions could affect the equity they build over the lifetime of their mortgage.”
The findings suggest agents may encounter more price-sensitive sellers and homeowners reluctant to move if they believe a sale could crystallise a loss.
