Rebound in house prices will reduce negative equity

The housing recovery continues to go from strength-to-strength. House prices have risen by 5% over the past 12 months and there is an upside risk of a further acceleration. The faster prices rebound, the quicker the negative equity problem will be resolved. Almost half of mortgage borrowers still don't have the 80% in home equity required to qualify for a standard refinancing that would allow them to take advantage of record low mortgage rates. But that picture will change rapidly if house prices were growing at as much as 10% per year. Almost 3.5 million borrowers could exit negative equity over the next 12 months.