Negative equity in the housing market appears to be affecting a similar number of households as it did during the housing bust of the 1990s, but it could be still more dangerous for the financial system and economy, according to the Bank of England.

While data on negative equity are patchy, the Bank points to recent estimates that between 7-11% of owner occupiers with mortgages have more outstanding mortgage debt than the market value of their homes. The Bank expects the true level of negative equity is likely to be at the upper end of this range.

The estimates suggest that between 700,000 and 1.1m households have been trapped by the 20% drop in house prices since autumn of 2007, according to the Bank’s latest quarterly bulletin. However, survey data indicate that the average degree of negative equity was not particularly deep in the first quarter of this year.

Financial Times, Daily Telegraph