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Currently, around half a million people are already in negative equity as a result of the drop in house prices witnessed over recent months, reports the Telegraph.
The bank's stability report said: "While house prices were rising, many households had accumulated substantial buffers of housing equity. Falls in house prices reduce the size of these buffers and, for some borrowers, could result in negative equity."
In related news, high street lender Abbey has weathered the financial storm better than most, it has emerged.
New figures have shown that the bank, which recently purchased Alliance and Leicester's savings book in addition to that of Bradford and Bingley, provided a quarter of all new net mortgages during the last quarter.
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