The return of negative equity: Thousands at risk of owing more on homes than they are worth

Those who took out huge mortgages while property prices were soaring have been left exposed by the market downturn.

Credit ratings agency Experian have drawn up a map showing which areas of the country are most at risk from a fall in prices.

It found that in some parts of Britain, the average mortgage debt is more than 90 per cent of local property prices.

This leaves owners vulnerable to negative equity - where the amount owed on the home is more than it is worth.

The research showed that Calderwood Street postal area in Woolwich, London is at the highest risk of negative equity in England. The average mortgages there is 91.1 per cent of property value.

Other danger areas include Chorlton Road in Manchester, where the average loan is over 90 per cent and High Street, Chatham, where the ratio is 89.9 per cent.

In Britain as a whole, Sighthill in Glasgow is the most high-risk postcode at 94.5 per cent. The figures in these ares are an average, suggesting that some homeowners are exposed to even higher levels of debt.

As a result, even a fractional fall in house prices could push them into negative equity.

In total, 277,140 homes in Britain are in areas with an average mortgage debt of more than 70 per cent in relation to property prices.

On a regional level, the map shows the North East has the highest level of mortgage debt relative to house prices at 53.5 per cent, followed closely by Scotland and the North West.

Andrew Burrell, chief UK economist at Experian, said: "There have been concerns about over-extension in the mortgage market after many years of rapid growth and these data give a very strong indication of the weak points across the UK.

"The highest loan-to-value areas are likely to be those most vulnerable to house price falls, as they will see negative equity emerge more rapidly.

"Negative equity was a major problem a decade ago, as it prevented many families from moving at a time when the market was already being hammered by high interest rates.

"While we do not expect such a long and deep slump as in the early 1990s, the outlook is for two years of falling prices along with a continued rise in repossessions."

The Land Registry revealed this week that house prices are falling across the UK, down 0.4 per cent in December.

It is the first monthly fall since 2005, with prices falling in seven of the 10 regions of England and Wales.

The average cost of a UK home is now £184,469.

The financial regulator warned more than one million families are in danger of losing their home over the next 18 months.

The financial regulator, the Financial Services Authority, has warned tmore than a million families are in danger of losing their homes in the next 18 months.

With banks now tightening their lending criteria, many coming out of a fixed-rate term on their home loan will find they cannot switch to another cheap deal.