It has been reported that the number of homes being repossessed rose by 65 per cent in 2006, suggesting higher interest rates are beginning to bite.

More than 17,000 properties were repossessed in 2006, this compares with around 10,000 in 2005.

This dramatic increase means that in 2006 one in every 690 mortgage-holders lost their homes.

The Council of Mortgage Lenders (CML) released the figures today stating that it expected the number of repossessions to continue rising steadily to 19,000 in 2007 and 20,000 in 2008.

Campaigners trying to prevent home repossessions called for urgent action from the Government and mortgage lenders to help reverse the current trend.

Adam Sampson, chief executive of homelessness charity Shelter, said: “This massive rise of 65 per cent in mortgage repossessions means thousands more hard-working families face the nightmare of becoming homeless.

“We are calling on mortgage providers to be more responsible, particularly when lending large sums of money to vulnerable people on low incomes, and urging the Government to increase support to help families keep a roof over their heads.”

The Council of Mortgage Lenders said the trend demonstrates increasing difficulty in repaying loans as a result of higher interest rates.

The dramatic increase in the number of repossessions comes at a time when lenders have begun offering mortgages of five times or more the value of combined salaries to people desperate to find a way onto the property ladder.

On a slightly more positive note the CML reported that the number of borrowers falling six months behind on repayments has been falling slightly year on year.