By Charlie Weston
THOUSANDS of first-time buyers are being forced to pay out sky-high mortgage rates because negative equity has trapped them with their current lender.
They have been hit by a double whammy — stuck with high repayments and a house worth less than the price they paid.
Those who took out 100pc mortgages have probably seen about €50,000 each wiped off the value of their homes.
As many as 40,0000 new buyers could be in negative equity, according to recent calculations by stockbroking firm Davy. This calculation was based on first-time buyer house prices falling by 10pc in the past year.
He accused some lenders of exploiting the situation by charging excessive rates.
“People who took out 100pc mortgages are at the mercy of their lenders, but the lenders are not showing them any mercy,” he said.
In the past two years, mortgage rates have shot up from around 4pc to almost 6pc.
Some 36pc of first-time buyer mortgages were 100pc ones in 2006.