Negative equity threat issued by bank
Around 1.2 million mortgages for professionals holders and other homeowners could face negative equity, new research claims to show.
Investment bank Morgan Stanley said that the figure, which equates to one in ten mortgage holders, would result from home prices falling by 15 per cent by 2010.
This factors in a ten per cent drop for 2008 - with a further five per cent reduction over the next year.
The most recent house price survey from mortgages for professionals lender Halifax shows that this process could already be under way - with costs falling by 2.5 per cent in the UK over March.
Commenting, head analyst David Miles said: "Our base case is for a 15 per cent fall in nominal prices over two years."
He added that his "bear case" - in other words, the worst case scenario - predicts a 25 per cent drop in housing costs.
The total negative equity predicted by Morgan Stanley could equate to £164 billion.
Investment bank Morgan Stanley said that the figure, which equates to one in ten mortgage holders, would result from home prices falling by 15 per cent by 2010.
This factors in a ten per cent drop for 2008 - with a further five per cent reduction over the next year.
The most recent house price survey from mortgages for professionals lender Halifax shows that this process could already be under way - with costs falling by 2.5 per cent in the UK over March.
Commenting, head analyst David Miles said: "Our base case is for a 15 per cent fall in nominal prices over two years."
He added that his "bear case" - in other words, the worst case scenario - predicts a 25 per cent drop in housing costs.
The total negative equity predicted by Morgan Stanley could equate to £164 billion.
