Fewer than 175 people have been able to get a new negative equity mortgage
ONLY one out of every 1,600 homeowners in negative equity has got the thumbs up for a mortgage over the last year.
When launched more than a year ago, negative-equity mortgages were touted as a much-needed lifeline to the 300,000 homeowners trapped in negative equity.
However, less than 175 negative-equity mortgages have been approved for homeowners not in mortgage arrears, according to research by the mortgage-broker group, the Association of Expert Mortgage Advisors (AEMA).
Furthermore, less than half of the negative-equity mortgages approved have been taken up by homeowners, according to the AEMA.
Negative-equity mortgages let you sell your home and carry over whatever debt is left on a previous mortgage on to a new loan.
"It's hard to get approval for a mortgage if you're in negative equity," said Trevor Grant, chairman of the Association of Expert Mortgage Advisors. "For an awful lot of people looking to trade up, to be able to move, these people have to carry any shortfall from the sale of their existing home. This means they have to qualify for that shortfall – as well as the new mortgage.
"In our experience, borrowers are usually apartment owners who are looking to purchase a family home – so the negative-equity carry can be quite large."
When contacted by the Sunday Independent last week, AIB, Bank of Ireland, Danske Bank and Permanent TSB would not disclose the number of negative-equity mortgages they had approved.
"We have always said that we only expected negative-equity mortgages to be done on a very limited basis," said a spokesman for Permanent TSB.
Although negative-equity mortgages were initially only available to people who were not in mortgage arrears, some banks started to offer these mortgages to people in arrears last November – as long as the homeowner traded down.
However, only six homeowners in financial difficulty have managed to get negative-equity trade-down mortgages, according to the latest figures from the Central Bank.
The Central Bank warned last week that it could be late 2015 before property prices started to recover.
Property prices have fallen by more than 50 per cent over the last six years.