Who has negative equity? How house price falls in Britain have hit different groups of home buyers

Abstract

Abstract This paper reports the results of a study which used a set of individual mortgage records from a major building society to examine the distribution of negative equity between different categories of borrowers in Britain by the third quarter of 1993. The major findings are: negative equity was disproportionately held by borrowers with properties in the South East (although there are very significant micro‐spatial variations); only in the northern regions of Britain were people with mortgage advances of more than 90% of purchase price unlikely to have negative equity; negative equity was disproportionately held by those who purchased their property between 1988 and 1991; negative equity is disproportionately held by those on lower incomes; negative equity is disproportionately held by younger borrowers. In every region it is borrowers who were under 25 at the time of purchase who held the largest proportions of negative equity in 1993. Negative equity is disproportionately held by those who purchas...