Reset: An analysis of negative equity in Ireland and the UK

I found a group called ‘Reset’ who are group hoping to lobby on behalf of people in negative equity and arrears in the UK and Ireland. They have a presentation which I have posted part of.

Why Negative Equity Matters: Lower house prices, which may lead to negative equity, can reduce housing investment by builders as well as investment by home-owners in their property.

The fall in property value impacts the overall wealth of a country and may impact consumption.

As home values fall or as negative equity becomes an issue, financial institutions may start to reduce the level of lending their offer, and increase the cost of borrowing.

If the cost of re-financing a mortgage increases and the ability to re-finance is reduced due to stricter terms (e.g. loan-to-value ratio) the mortgage holder may be disadvantaged.

People who find themselves in negative equity may increase their rate of savings to pay down the principal, thus reducing their consumption and hurting the economy.

Negative equity could make it difficult to sell your house, …

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When the truth comes out about arrears.

I often try to focus on ‘what is’ rather than ‘what is right’ (and sometimes still get it wrong!), but the idea is to look at something from as objective a standpoint as possible. I’ll take the National Geographic for instance (stick with me on this!), if you watch it objectively and see a lion kill a gazelle you realise that it is nature, the gazelle didn’t want to be torn apart, equally the lion doesn’t want to starve to death and if you accept that lions killing gazelles is a perfectly natural thing then you are seeing what ‘is’. On the other hand if you watch the same scene but the build up to it was following the life of that particular gazelle from birth and its a Bambi story then the killing scene becomes a sickening tragedy.

That is the difference sometimes between looking at what is ‘just’ or ‘right’ and what merely ‘is’, I don’t know about you but I certainly struggle with that at times. It is …

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