Return of negative equity loans after house prices dive

The slump in house prices has meant the return of negative equity mortgages for the first time in 18 years.

More than three million customers of major lenders like Halifax, Lloyds and Cheltenham and Gloucester will from February get the chance to move house even if they are trapped in negative ­equity.

The last time this type of mortgage was offered was during the 1993 housing market ­recession when 1.5 million lived in homes worth less than their mortgage.

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NetRent Comment

House price dive is too strong a phrase and does not reflect the reality for most of the UK. If the lenders actually started to lend on reasonable terms we believe that there would be little or no need for negative equity loans. We predict that very few of the loans will actually be sold and it does beg the question why are these loans being offered now?

There has been no widespread and serious drop in UK house prices, but there has been a widespread and serious drop in lenders actually lending. Given the fact that the banks were bailed out by us, the UK taxpayers, why is it that they will not lend to us? Perhaps these banks should lend the billions they paid out in bonuses to first time buyers?