True, negative equity may be associated with high levels of indebtedness and hence with affordability issues if income and other assets are not correspondingly high. Furthermore, negative equity can limit access to further credit, and adversely affect geographic mobility, potentially creating a demand for a high LTV loan to allow the households to “take some of the negative equity with them” when they move.
These competences cover both the macroprudential and the microprudential level. In other words, they cover both individual banks and the banking system. Let’s start with the system-wide approach and macroprudential policy. This policy area is still 5 / 10  BIS central bankers' speeches  very young. It was born out of the financial crisis, but it has grown rapidly since then.