A LARGE number of homeowners in Derry are still in negative equity despite rising property prices, experts have warned.
Evidence from the latest Department for Social Development (DSD) report from the Housing Repossession Taskforce shows that a high number homeowners in Derry remain in negative equity.
The Royal Institution of Chartered Surveyors claimed that house prices in the North will rise faster than in Britain.
But experts here say that local property prices have still to recover and many are still languishing at 40% less than the peak.
The DSD report shows that in 2007, relaxed credit conditions and weak regulatory oversight were two factors that led people in Derry to borrow more against their homes – up to 120% in some cases.
Across the North, an average of 74% of remortgages at that time where taken by those withdrawing equity from their homes and property – far more than in any other UK region.
Add the fact that property prices were at their peak and the bubble then burst, the crash has been catastrophic for families in Derry.
Now that mortgage lending has all but shut down and property sales are stagnant, homeowners find that they cannot renegotiate their mortgage or offload their property. Even if they do they still face having to repay the shortfall on their mortgage.
Phil Davison set up Negative Equity NI said: “We see Derry homeowners all the time who really are stuck. Borrowers in negative equity can’t easily improve their position by changing mortgage or moving house.
“In either case, they’d still owe a big chunk of money. We assess their situation, talk to their lender and over time come to an agreement. There’s a lot of work involved – which we do on our clients’ behalf, of course – but it’s a much preferable option to carrying a large loan around with you for maybe the next 20 years.
“This report highlights what we’ve known for a long time and with an interest rate rise looming over the next year or so, many will find themselves squeezed further.”
The team’s ultimate aim is to help sell the house for the maximum achievable sale price and negotiate the level of debt still owed. In many cases, they have been able to write down a debt by 80 or 90% because they have a strong relationship with the lenders.
