Negative equity

 

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Negative equity

A situation where the purchaser of a property has taken out a mortgage and some time after the purchase, the value of the property falls below the mortgage amount. For example:Purchase price of property: 80,000Deposit: 10,000Mortgage: 70,000If the value of the property falls below 70,000, the mortgage holder has negative equity in the property.



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Negative pledge clause

Negative pledge clause

A bond covenant that requires the borrower to grant lenders a lien equivalent to any liens that may be granted in the future to any other currently unsecured lenders.


Negative covenant

Negative covenant

A bond covenant that limits or prohibits certain actions unless the bondholders agree.


Negative income tax

Negative income tax

A proposal to assist taxpayer with below-subsistence-level incomes. After filing a tax return, such persons would receive a subsidy to bring them up above the poverty level.


Negative externality

Negative externality

A harmful externality; that is, a harmful effect of one economic agent's actions on another. Considered a distortion because the first agent has inadequate incentive to curtail their action. Examples are pollution from factories (a production externality) and smoke from cigarettes (a consumption externality).


Negative yield curve

Negative yield curve

When the yield on a short-term security is higher than the yield on a long-term security, partially because high interest rates are creating a greater demand for short-term borrowing.


Further Suggestions

Negative cash flow
Negative convexity
Negative NPV tie in project
N Negative Amortization
Negative amortization
Negative duration
Negative list
Negative working capital


 
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