A recent Standard & Poors report cites that 4 out of 10 mortgage borrowers in Ireland are in Negative Equity. Furthermore, 6 out of 10 borrowers in Mortgage Arrears are also in Negative Equity. The average negative equity balance is currently €54, 000.
Given 40 per cent of borrowers find themselves in negative the estimate of those suffering this burden stands at €322, 500. An incredible statistic given we are now a decade on from the housing market crash.
Many have underestimated the problem of negative equity and its effect in Ireland. One issue we see at Bell & Company is that young families are essentially trapped in a property which is not big enough to accommodate them adequately. Accordingly, they are unable to up-size as required. The main catalyst of this issue was mortgages issued with a higher loan to value during the credit boom.
Another consequence of negative equity is that those suffering the burden typically are less inclined to spend which effects everyone. This is known as the “wealth effect” and Ireland is one of the worst performing countries in this aspect compared to others.
And high levels of negative equity feed into the rates charged on variable mortgages. If you are in negative equity you cannot switch to get a better deal, so have accept whatever high rate you are charged by your exploitative bank. What this means is that you may not be in negative equity, but it is playing a role in the high variable or fixed rates you are paying.
Bell & Company understand the burden of negative equity debt, but insist you do not have to be a “mortgage prisoner”. We have assisted borrowers across Ireland to liaise with their lender and secure a property sale despite the negative equity. From here we have successfully negotiated reduced settlements with a variety of core Irish lenders saving our clients often tens of thousands of Euros per case.
Should you or anyone you know be suffering a Negative Equity burden with any lender or associated entity then please call Bell & Company today on +44 (0) 2895 217 373. We always offer a free initial consultation and where feasible will happily travel to meet prospective clients. We look forward to assisting.