The report, Underwater - Exposure to Negative Equity in UK Prime Residential Mortgage-Backed Securities (RMBS), published by Fitch suggests that 10% of prime borrowers (representing 15% of loans by value) are already in negative equity. If house prices continue to fall to previously predicted levels (a 30% trough) the percentage of loans by value in negative equity will rise to 23%. A 40% fall in house prices (which is not out of the question) would see 52% of loans by value in negative equity.

Of course this doesn't matter in the longer term for people who are in employment and happy to stay put. But what will matter is the effect unemployment could have on this scenario.

In times of hardship people often look to the equity in their homes to raise finance to see them through the difficult times for example following redundancy or losing a business. It has not been uncommon in recent years for people to re-mortgage their homes to shore up a struggling business.

Refinancing even for people who have some equity in their homes will be difficult. They will find that their equity has fallen significantly and that coupled with the continuing reluctance of banks to lend money means that the favourable deals on offer up until last year are no longer open to them.

The housing market needs to be reinvigorated in order to resolve these problems but no one is going to sell unless they absolutely have to. Talk of 'green shoots' and recovery may seem a little premature in the light of this report.