Negative equity was a fact of life for many home-owners in the early 1990s. For most, it came as something of a shock. Few people anticipated the economic conditions – interest rates doubling between 1988 and 1990, businesses failing, redundancies and the crash in the property market. Many people honestly do not appear to have appreciated that their mortgage merely secured an underlying loan and, come what may, that loan had to be repaid.
The sad reality was that most people whose homes were being repossessed found themselves in that situation because they had insufficient income to meet the monthly payments and no other assets. Lenders therefore had little choice but to defer any further action.
