91% of recent homebuyers are concerned the equity in their home could reduce, with 44% believing it’s likely that they will enter negative equity during their current mortgage term, new research reveals.
Boon Brokers surveyed 1,000 UK homebuyers who purchased a property using a mortgage within the last five years to understand how recent buyers perceive equity concerns amid current changing market conditions.
The findings revealed a growing disconnect between current confidence and future market expectations. While most homebuyers believe their property has increased in value since purchase, concerns about entering negative equity remain widespread.
Nine in ten (91%) recent homebuyers expressed some level of concern that changes in the housing market could reduce the equity in their home. Within this, almost half (47%) said they were either very or extremely concerned, while only 9% reported having no concerns at all.
44% of recent homebuyers believe they could enter negative equity during their current mortgage term, however, concerns around negative equity differ considerably by age. More than half (56%) of buyers aged 25-34 believe they are likely to enter negative equity during their current mortgage term, compared with just 21% of buyers aged 55–64 and 15% of buyers aged 65 and over.
A similar trend was reflected in the strength of concern expressed by respondents. 20% of buyers aged 18-24 said they were extremely concerned that changes in the housing market could reduce the equity in their home. This compares with 13% of buyers aged 25-34, 14% of those aged 35-44, 9% of buyers aged 45-54, 3% of those aged 55-64 and 6% of respondents aged 65 and over.
The data also shows that concerns around negative equity also differ considerably by location. More than half (51%) of London respondents believed that entering negative equity is either very or fairly likely during their current mortgage term. This compares with 49% in Nottingham, 48% in Birmingham, 35% in Manchester and 27% in Leeds.
Despite the research revealing widespread concerns about housing equity, most recent homebuyers believe their property’s value has increased since purchase. Overall, 58% of respondents said they believe that their property had increased in value, while 24% believed it had remained broadly unchanged and only 17% believed it had fallen.
When asked to identify their single biggest concern about the current housing market, 33% of recent homebuyers selected higher mortgage repayments, making it the most common response.
Negative equity ranked second at 24%, followed by falling property values (14%), being unable to remortgage (11%) and difficulty selling a property (9%).
