More than one in ten British homeowners have entered negative equity, with their property now worth less than the value of their homes, according to data released by the Bank of England.

The Bank's quarterly survey revealed that the collapse of house prices has meant that around one million households have fallen into negative equity.

Rising negative equity can damage the economy as homeowners save more in order to repair their damaged balance sheets rather than spending money as the average house price has dropped by around 20% since a peak in the Autumn of 2007.