As homeowners struggle to make ends meet, it appears as though more of them are now seeking equity loans in hopes of paying their bills. However, as housing values drop, this may create a problem for those with outstanding equity loans. In addition, homeowners may not be able to get as large of an equity loan as they need, as banks look to steer clear of negative equity situations. While equity loans are popular, there does appear to be a catch 22 in many cases for borrowers that need this type of loan to keep their homes.
Michael Coogan, director general of the CML, said: “The number of people facing difficulty needs to be kept in perspective.
“The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market for those coming off cheaper original deals.”
Simon Chalk, mortgage and equity release planner for Sheffield-based Mortgage Portfolio Services, stated, “Although this is no surprise, we are in a different situation from the 1990s as we have higher employment and a stronger economy.”
Related reading : Equity Loans
