Nationwide is offering a 125% mortgage to help existing customers in negative equity.
One in six prime UK mortgages is in negative equity, with the possibility this figure could climb to one in three if house prices fall in line with its expectations, Fitch warns.
The Council of Mortgage Lenders (CML) has suggested around 900,000 home-owners are currently in negative equity, though it highlighted the majority - around two-thirds - face only modest shortfalls of less than 10%.
The average UK homeowner has a significant equity cushion, and does not need to worry about negative equity, according to GE Money Home Lending.
Vince Cable, shadow Chancellor for the Liberal Democrats, has called for greater help for homeowners suffering negative equity.
Charcol has denied the launch of its negative equity mortgage product next month suggests the housing market is in danger of crashing.