Up to one in 10 families could be plunged into negative equity if house prices fall by 15%, an investment bank has warned.
Economists at Morgan Stanley are predicting house price falls of up to 10% this year, followed by a further drop of 5% in 2009.
In a report on the UK housing market, they warned that if these falls materialised, 10% of mortgages would be for a higher sum than the value of the property they were taken out on, meaning homeowners would be in negative equity.
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