The number of households in negative equity has fallen over the last 18 months, according to research from the Council of Mortgage Lenders (CML).

Meanwhile, borrowers collectively continue to hold large amounts of unmortgaged equity in housing, despite modest falls in house prices across the UK and more pronounced reductions in property values in some regions.

The research found the amount of unmortgaged housing equity held by borrowers remains broadly unchanged since last year at around £800 billion, despite the weakness of house prices in the intervening period (this level of equity, compared to outstanding mortgage debt, equates to an average loan-to-value ratio of 56%).

The number of borrowers in negative equity has declined by more than 100,000 (or 13%) since the first quarter of last year, from 827,000 to 719,000, while the proportion of first-time buyers who have taken out loans since 2005 and are in negative equity has declined from 26% to 20%.

Also, around 90% of all borrowers taking out loans since 2005 hold some equity in their property, with more than half owning at least 30% of the value of the property and more than 80% holding an equity cushion of at least 10% of their home’s value.

However, the CML said that despite the constraints on lenders, borrowers have more options than during the downturn in the 1990s, when the choices were essentially between staying put or selling and accepting a lower price than they had paid previously. Today’s much larger private rental sector, for example, provides greater scope and flexibility to those considering letting out their home and renting another, with some lenders also providing an option that was not available in the last market downturn – buying another property with a rent-to-buy loan. The NewBuy scheme is another alternative for existing home-owners with reduced equity who may be able to afford only a small deposit.