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One in 10 will face negative equity if house prices fall as expected

Government predicts a 16pc drop in house prices once the current ‘mini-boom’ collapses

More than one in ten mortgage borrowers will fall into negative equity in the event of a house price crash – and young families are most at risk, an influential think tank has said.

The Resolution Foundation said 11pc of homeowners would see their property value fall to be worth less than their outstanding loan if house prices plummet in line with official predictions.

Around 11 million families have a mortgage, according to the banking trade body UK Finance, meaning more than 1.2 million are at risk.

The Government’s independent forecaster, the Office for Budget Responsibility, has said it expected residential property prices to fall by 16pc in the worst case scenario.

This would lead to the largest increase in negative equity levels since the financial crisis – when a 17pc fall in house prices meant 15pc of borrowers went into the red.

The Resolution Foundation report said millions of families face being tied to their homes – unable to sell without realising a substantial loss – and could be forced to pass up opportunities to…

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