1.7m at risk in negative equity slump

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The forecast from Standard & Poor's suggests the problem is far worse than was predicted.

In a report, its analysts estimate further house price dives totalling 17 per cent over the coming months and into next year.

Prices are thought to have fallen by up to 10 per cent since last autumn with tens of thousands of homeowners already in negative equity.

But the fall forecast by Standard & Poor's will see 1.7 million homes slump to a value below the amount the homeowner borrowed on their mortgage.

Standard & Poor's credit analyst Andrew South said: "The downward trend in UK house prices now seems well established and we expect prices to continue falling in the near term. Our economists forecast a further drop before prices flatten off."

The report also found that homeowners in buy-to-let schemes are particularly exposed.