Nationwide Building Society yesterday attacked the Bank of England's figures on negative equity, claiming figures are almost a third higher than the bank's estimate of 925,000.
Nationwide reckons about 1.5 million households have negative equity - a home having less value than the mortgage taken out to buy it - in the second quarter of this year.
The most up-to-date government figures, covering the first quarter of 1995, suggested there were 886,000 households with negative equity.
Nationwide used the figures to launch a new plea for government support for first-time buyers to help kick-start the stagnant housing market.
The attack comes as Peter Birch, chief executive of Abbey National, issued a similar plea yesterday, while forecasting a flat housing market for another two to three years. "We would like some help from the Government in the Budget in November for first-time buyers," he said. "I would also like a cut in interest rates."
Adrian Coles, director general of the Council of Mortgage Lenders, said: "We certainly recognise negative equity as a serious problem. But it doesn't really matter whether you accept the Bank of England figure or the Nationwide's figure." "Even if you have neutral equity, you still need pounds 5,000 to pounds 6,000 to move house."
The CML recently delivered to the Government a series of proposals for solving the negative equity problem, Mr Coles said. One was to offer higher rates of mortgage tax relief to people moving house. Instead of 15 per cent relief, movers would get 25 per cent over five or 10 years.
Paul Sonder, Nationwide's head of research, stressed that estimating the number of homeowners suffering negative equity was difficult because of differing measurement techniques.
The main reasons the Nationwide's estimate was higher than those of the Bank and Government was that it used a different house price index - which showed a seasonally adjusted fall of 1.3 per cent in the second quarter of this year compared with the first.
Mr Sonder said the Nationwide also took into account mortgage arrears, which boosted the size of the problem. He said the headline figure gave an exaggerated impression of the impact of negative equity, concentrated in the south of the country, on the housing market.
Although it was having a dampening effect on confidence, not everyone with negative equity wanted to move.
Gary Marsh, a spokesman for the Halifax, said estimating the number suffering negative equity was virtually impossible - a point made by the Bank of England - because you would have to know each homeowner's financial details, he said.
For instance, said Mr Marsh, take two families buying identical houses next to each other for pounds 100,000. Over five years, the properties both fall in value by 20 per cent. If one family had a 100 per cent mortgage it would have 20 per cent negative equity. But if the other had an 80 per cent mortgage and paid pounds 20,000 up front, it would still be equity neutral.
Mr Marsh said Halifax was also "extremely sceptical" of schemes aimed at helping first-time buyers because it was difficult to define them for Inland Revenue purposes. People who sell up and buy after a period of renting, or partners who split up would be in a grey area.