The great house-price trap

Tim Bennett rounds up the week’s personal finance news, including how almost a fifth of houses bought in the last five years are now in negative equity.

Nearly a fifth of homeowners who bought their property in the last five years are now in negative equity, according to property website Rightmove.co.uk. This means that the value of their houses is less than the outstanding mortgage debt secured on it. Rightmove now believes that it will take "more than a modest market recovery" to help many of those affected.

The major problem with being in negative equity, aside from the fact that selling a home would trigger an immediate overall loss, is that in most cases it stops the homeowner from moving house. One bright spot for those trapped came from Hometrack, which stated that, although its latest price survey suggests year-on-year home prices have fallen by 0.4% nationally, this is the smallest fall for two years.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.