Value of unmortgaged homes triples

The total value of unmortgaged housing equity has tripled to around £2.2 trillion over the past ten years, according to the Council of Mortgage Lenders.

Writing in the latest issue of the CML's quarterly guide, Housing Finance, CML economists also said housing prices would have to fall by up to 22 per cent before 2002 first-time buyers become exposed to negative equity.

And according to the Survey of English Housing, the average outstanding mortgage is £76,000 and the average level of unmortgaged housing equity is £81,000.

The average proportion of unmortgaged equity among recent movers is 52 per cent, but for people who moved less recently the proportion would be higher.

The CML found that, of around 359,000 first-time buyers in 2003, 97,000 took out loans with less than a 5 per cent deposit, and 40,000 took a deposit of between five to 10 per cent.

"Lenders have developed policies and procedures to enable households with negative equity to have portable loans. As a result, any future period of negative equity should have a lesser impact on the operation of the housing market," the report states.