Negative Equity


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Negative Equity

A situation in which one owes more on a loan used to pay for an asset than that asset's current market value. For example, if one borrows $100,000 to buy a house and, for whatever reason, the value immediately drops to $60,000, the homeowner is said to have negative equity. Negative equity is most common after the burst of an asset bubble. One with negative equity is said to be upside down in the loan.
References in periodicals archive ?
The most extreme type of zombie company comprises negative equity companies which continue to trade in spite of having lost all their equity (see Mohrman and Stuerke 2014 for an example).
As with negative equity and no credit history, lenders will look to offset any risk when financing your vehicle.
Housing sale dilemma - should householders struggling with negative equity make a loss on their property .
The top five states with the highest share of negative equity accounted for a combined 30.
Looking ahead, the national negative equity rate is expected to fall to 14.
Research shows more people are concerned about rising house prices than negative equity in 10 out of 12 UK regions
The HomeOwners Alliance's report found that the North East and Northern Ireland, where prices have only recently started to stabilise, were the only areas where the danger of tipping into negative equity is still seen as a more serious concern than rising values in the property market.
In Northern Ireland, 41% of borrowers - 68,024 households - were in negative equity at the end of 2013.
Surging home prices this spring and summer, lower levels of inventory and declining REO (real estate-owned) sale shares are all contributing to the nascent housing recovery and declining negative equity," said Mark Fleming, chief economist for CoreLogic, in a statement.
Given the large levels of borrowers with negative equity and the large number of potential foreclosures, it is difficult to determine if mortgage banking will be as profitable going forward.
Down the decades support packages for housebuilding and the housing market have merely served to stoke up negative equity for first-time buyers.
Together, negative equity and near-negative equity mortgages accounted for 27.