The number of people whose homes will be repossessed is set to surge by 67 per cent to 75,000 next year in line with the rate reached in the last recession during the early nineties.

According to forecasts from the Council of Mortgage Lenders (CML), the number of reposssessions will hit 45,000 this year but is forecast to rise significantly next year.

Home repossessions peaked at 75,500 in 1991, the last time that the UK was in recession.

While Britain is not officially in recession, it is widely expected that it will fall into a full-blown slowdown during this quarter, after GDP shrunk between July and September. The technical definition of a recession is two quarters of negative growth.

The number of people expected to fall behind with their mortgage payments is also expected to double. Around 500,000 people aree expected to fall at least three months behind with their mortgage repayments, compared with 210,000 in 2008.

Britons are facing increasing financial challenges as the number of people losing their jobs rises.

Yesterday, government figures showed that the number of people claiming unemployment benefits soared through the one million mark for the first time in eight years, after rising by 75,700 to 1.07 million in November.

Mortgage lending has also fallen 51 per cent on the same time last year.

Gross lending collapsed to £14.6 billion in November, down 22 per cent from October.

There is typically a decline in lending from October to November, following the mid-summer property slump, but it is considerably larger this year, reflecting a deterioration of confidence in the economy.

Michael Coogan, director general of the CML, gave warning that net mortgage lending — the difference between money lent to new homeowners and repayments from existing homeowners — is likely to dive to minus £25 billion.

“Repayment problems will worsen against the backdrop of rising unemployment. Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful but more will be needed.”

“Borrowers who remain in employment will see some benefits in the form of lower mortgage rates,” he added.

This week Nationwide became the first lender to re-introduce mortgages worth up to 95 per cent of a property's value. But the loans are available only to existing customers who are moving house. Borrowers wanting a fixed-rate deal will have to pay 7.18 per cent — 5.18 percentage points above the Bank of England base rate.

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