Mark's Negative-equity-o-meter: Update

It turns out that my original back-of-fag-packet estimates were probably correct, i.e. there are 11.7 million outstanding mortgages and let's assume that loan-to-value ratios were evenly distributed at the top of the market, so for every one per cent fall in prices from peak, you'd expect +/- 117,000 more households to go into negative equity.

There were two stories this week, the first was that GfK NOP had interviewed 60,000 people and extrapolated this up to assume that there were already 3.8 with "loans worth more or close to the value of their homes.". The didn't define "close to", but let's assume that half of those are actually in negative equity as at today, or 1.9 million. The second is Lloyds Banking Group's claim that 540,000 of their borrowers are in negative equity. Lloyds TSB and HBOS together have 28% of the mortgage market, so that would pro rate up to 1.9 million as well.

According to the Nationwide, the average house price is down by 20% from the peak in late 2007, which would give us a figure of 95,000 mortgages in negative equity for every 1% fall in house prices. That's a bit less than 117,000, so let's split the difference and call it 100,000 additional cases for every 1% fall from peak.