During the 1993 housing recession it was estimated that one and a half million homeowners had negative equity. The Council of Mortgage Lenders has announced that approximately 900,000 homeowners currently have some degree of negative equity. They believe around 600,000 of these homeowners have seen modest shortfalls of around 10%. When compared with the previous economic downturn which was more concentrated amongst the young and first-time buyers this time around it seems to be more evenly spread across a wider age group and people at different times on the property ladder.



Throughout the 1990's the average base rate was 8.1% they did not witness interest rates tumbling to their lowest level since records started as we have seen this time. It seems that most people previously did not move house but choose to stay and continue to pay their mortgages. By 2000 their negative equity situation had reversed and they then found that their homes had increased substantially in value and equity.

Negative equity is never an issue unless you have to sell your home. The best money saving advice I can provide is that you stay in your home and weather the storm. The housing market has a habit of bouncing back it might just take a while to bounce back this time. As interest rates are low you should take full advantage of overpaying your mortgage if you are fortunate to have a tracker rate mortgage or a standard variable rate mortgage that has reduced your monthly mortgage payments.

Negative equity is a problem when people are struggling after a change in their financial circumstances possibly where one partner may have lost their job and they find themselves needing to sell their homes. This is often the case where people have over extended their finances by having large repayments for their mortgage, credit card debts and loans. All too often they have not taken out any redundancy cover to protect their mortgage payments and associated bills should they lose their jobs. Selling your home when you have negative equity is a nightmare!

Do you think more of the dog or the kids and the wife?

When times are good most people believe they can walk on water and that it will never happen to them. When problem that was avoidable then comes along and knocks them off their self-satisfied branch high in the tree they seem to fall and wonder why they did not protect their home and family. Insurance of any kinds is a waste of money until one day you need it and you don't have it but alas it's too late. Its strange people will insure their pets with a £35 a month health plan for Rover the dog, their cars for fully comprehensive insurance and yet they don't seem to insure themselves and their families should they lose their jobs or have an accident or sickness.

We all need money saving advice and help with our finances as the market place is for ever changing.