The overall scale and impact of negative equity on the housing market needs to be kept in perspective, the Council of Mortgage Lenders (CML) has said. Research has found that there are currently 900,000 households in negative equity. However, the majority, around two thirds, face only modest shortfalls of less than 10 per cent, which equates to around £6K for first time buyers and £8K for other homebuyers. The problem is also less concentrated among first time buyers and more evenly spread across wider age groups and those at different points on the housing ladder, when compared with the previous downturn. Most are choosing to sitting tight, save money and pay off their mortgage. A similar approach was adopted by the 1.5 million households estimated to have negative equity at the height of the last housing market recession in 1993, the majority of which recovered their equity position. Bob Pannel, head of research at CML, observed that it should be easier for households to rebuild their equity position than it was during the early 1990s because of low interest rates on their mortgages, making saving and overpaying possible. The research also said that the link between negative equity and mortgage repayments was unfounded, with changes in personal circumstances, such as reduced income, more culpable. Furthermore, the CML estimates that despite the weak market, homeowners in the UK still have approximately £2.1 million of unmortgaged housing equity.
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