The number of people who are losing their homes because they cannot meet rising mortgage bills is set to double this year, experts said yesterday.

Dearer mortgage costs in the log-jammed home loans market were blamed for a rise of almost 20 per cent over the past year in court orders allowing lenders to seize properties.

The number of repossession orders granted in England and Wales in the first three months of the year climbed to levels not seen since the early 1990s, reaching 27,530. That was up by 17 per cent on a year earlier, and by 9 per cent since the final quarter of last year alone.

In a further sign of the growing financial distress, the number of new court actions started by lenders seeking repossession also leapt sharply. It rose to 38,688 in the first three months of the year, up by 16 per cent on a year ago, and by 7 per cent on the previous quarter.

The news will spark fears that a new wave of repossessions this year will aggravate rapidly worsening conditions in the housing market at a time when prices have already begun to tumble.

The latest survey from Halifax, the biggest mortgage lender, showed that average house prices dropped by 1.3 per cent in April, and are down by 0.9 per cent on levels a year ago.

Rising numbers of cheap, discounted properties being offloaded by lenders after repossession will only increase the downward pressure on prices, economists said.

Not all orders granted by the courts for lenders to take back homes from borrowers in financial trouble lead to actual repossessions.

But experts sounded warnings that after numbers of homes seized soared last year by 21 per cent, a further sharp rise seemed inevitable given the trend in court actions and orders.

Over the past three years, numbers of repossessions have trebled and the Council of Mortgage Lenders estimates that about 45,000 homes could be seized this year. However, this forecast was made before the full scale of the credit crisis became clear, so that the eventual figure may now be much higher, economists cautioned.

“The financial pressure on many homeowners is increasing and it seems certain that repossessions will trend up appreciably over the coming months, particularly if the economy suffers an extended, marked slowdown and unemployment starts rising, which seems likely,” Howard Archer, of Global Insight, a leading economics consultancy, said.

“A significant number of people have had to stretch themselves to the absolute limit to get into the housing market in recent times as prices have soared. This means that they are particularly vulnerable to any adverse shock to their finances.”

Experts also urged a sense of perspective, pointing out that the present level of repossessions remains considerably below the peak of 75,540 homes seized during 1991, at the peak of the last recession. About 142,900 repossession orders were made that year.

However, the scale of the looming problem was emphasised as Citizens Advice revealed that its advisers have experienced a rise of more than a third in problem cases over mortgage arrears in just the first two months of this year.

Sue Edwards, Citizens Advice's head of consumer policy, said there was evidence that in too many cases lenders were resorting to court action as a first, rather than a last, resort.

“We want to see all lenders doing everything in their power to avoid things getting to this stage,” she urged.

Alistair Darling, the Chancellor, turned up the heat yesterday on big lenders to act sympathetically towards distressed borrowers, holding talks with senior figures from leading high-street banks, including Lloyds TSB, Barclays, Royal Bank of Scotland, Halifax Bank of Scotland, Abbey and HSBC. Ministers also unveiled a £10 million package of measures to assist homeowners who get into trouble, and enhance the advice and legal support available to them.

Caroline Flint, the Housing Minister, said that families facing repossession because of the credit crunch would receive free legal advice and insisted that repossession rates remained at historically low levels.

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