Negative equity `could last for four more years`

Tens of thousands of homeowners who bought their home during the `housing boom` could be in negative equity for another four years, according to the National Housing Federation (NHF).

The NHF says that while the average house value at the peak of the market was £216,800, homeowners may have to wait until 2014 - when prices are predicted to reach £226,900 - before they can recover what they originally paid.

Negative equity occurs when the value of a property is less than the total remaining mortgage debt - meaning that selling the home would not completely pay off the mortgage.

This has become increasingly common in recent years due to sharp falls in house prices.

An expert at debt management company Gregory Pennington said: "Negative equity has affected a lot of people in recent years, especially those who took out 0% or low-deposit mortgages at the peak of the market. This makes selling an unattractive option for many people, and it can also cause difficulty with finding a remortgage deal.

"Some people in negative equity will manage well on their lender`s standard variable rate [SVR], but anyone concerned about how negative equity is affecting them should seek financial advice."

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