Mortgage lenders could be crossexamined by MPs next month as part of a Treasury Select Committee inquiry into soaring repossessions and the chronic shortage of home loans.

The inquiry, announced yesterday, will consider the success of government initiatives intended to reduce the number of families losing their homes, which is forecast to hit 75,000 this year. It will also examine the approach taken by lenders towards customers in arrears, particularly low-income borrowers considered to be sub-prime.

Sally Keeble, a member of the committee, said: “We will want to speak to constructive lenders, such as Nationwide, as well as those who perhaps are on the wrong track, to get to the heart of the problems in the market.”

The committee has also asked for written submissions on the availability of home loans, particularly to first-time buyers. The controversial sale-and-lease-back market will also come under the spotlight.

The inquiry was announced as a prominent economist warned that repossessions would not peak until 2011. Ian Shepherdson, chief economist at High Frequency Economics, a consultancy, said that 120,000 people could lose their homes in 2011 as unemployment soars. The Office for National Statistics revealed yesterday that unemployment had risen by 232,000 to 2.26 million in the three months to April.

However, the Council of Mortgage Lenders (CML) may revise down the estimate of 75,000 this year after its figures showed that 12,800 households — fewer than expected — had lost their homes in the first quarter of this year.

Frances Walker, of the Consumer Credit Counselling Service, the debt charity, said: “The evidence is that the initiatives that the Government has implemented have had a positive impact and we are seeing a flexible attitude by lenders.”

The return of first-time buyers to the housing market, seen as vital for a full recovery, is being hampered by a shortage of mortgages and the prohibitively high rates charged by lenders. The number of mortgages on the market has fallen considerably since the credit crunch began in mid-2007. There are only 1,265 mortgage deals on offer, compared with 11,951 in July 2007, according to Moneyfacts.co.uk, the financial website.

Halifax, Britain’s biggest lender, charges first-time buyers with a 10 per deposit 6.74 per cent for a five-year fixed-rate deal, compared with 4.19 per cent for existing homeowners with a 40 per cent deposit.

Mortgage lending has slumped to historically low levels as lenders struggle to secure funding from money markets. Mortgage approvals rose 16 per cent in April, figures from the CML show, but remain 28 per cent lower than the same month last year.

Written submissions have been requested from banks, building societies, trade bodies or other interested parties by July 1 and the committee aims to report back before the beginning of August. The Treasury will have two months to respond to its recommendations.

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