One in seven households could find their mortgage is more than the price of their home next year, according to Standard & Poor’s.

The ratings agency estimates that house prices, already 7% below their peak, will fall a further 17%, increasing the numbers in negative equity from just 70,000 households today to 1.7m, or 14% of borrowers.

S&P said properties with negative equity were likely to be worth 8% less than their mortgages on average, with the problem more prevalent in the Midlands and north of England.

It forecasts that prices will fall by a further 17%, or £30,000, by next April, putting 1.7 million borrowers into negative equity. A 17% fall in prices would take the value of the average house to about £150,000, down from £199,600 in August last year, according to Halifax figures.

Financial Times, The Times