One in 10 homeowners was in negative equity during the first quarter of the year, the Bank of England has said.
The Bank estimates that between 7% and 11% of homeowners with a mortgage owed more to their lender than their property was worth during the first quarter, the equivalent of between 700,000 and 1.1 million households.
In addition, around 200,000 buy-to-let investors are also estimated to have owed more on their mortgage than their property was worth.
The research said the overall number of people who were in negative equity during the first quarter was similar to those who suffered from the problem in the mid-1990s, during the last housing market correction.
It said house prices had fallen by around 20% between the autumn of 2007 and the spring of 2009, the largest nominal fall in property values on record.
But despite the steep drop, it found that the majority of homeowners had large equity cushions, while for others the total value of negative equity was relatively small.
The research suggested that between 73% and 78% of households who were in negative equity faced a shortfall of less than £15,000, and between 56% and 65% had one of less than £10,000.
