Home repossession orders in England and Wales hit the highest level since the early 1990s in the first three months of this year, government figures showed on Friday, and experts say the situation is set to worsen.
Further evidence of a deteriorating housing market will be uncomfortable for Prime Minister Gordon Brown whose Labour Party faces the tough task of winning back voters after a drubbing in regional elections and as the economy weakens.
The Bank of England will also be concerned to see more homeowners failing to keep up with mortgage payments. Despite three official interest rate cuts since December, the credit crunch has forced mortgage lenders to raise their rates.
Court orders for mortgage repossessions in England and Wales rose by 17 per cent in the first quarter of this year compared with the same period last year, hitting 27,530, the Ministry of Justice said. Orders were up nine per cent on the last three months of last year.
"Unfortunately the situation seems set to deteriorate significantly further," said Howard Archer, an economist at Global Insight. "Particularly if the economy suffers an extended marked slowdown and unemployment starts rising."
The number of repossession orders has tripled in the last five years although they remain well below the levels seen in the recession of the early 1990s when many homeowners were plunged into negative equity - with mortgage liabilities exceeding the value of their properties - as house prices dived.
There are now roughly 12 million mortgages in Britain, according to Council of Mortgage Lenders, so only a small fraction of homeowners are failing to keep up with payments.
Nonetheless, analysts are growing increasingly concerned about the state of Britain's housing and mortgage market in the wake of the credit crunch.
"Many homeowners are having to re-fix their mortgages at significantly higher mortgage rates as the cheap fixed loans that they took out a couple of years ago expire," Mr Archer said.
"Furthermore, those home owners with the weakest credit ratings are being particularly hard hit by tighter lending conditions and more punitive terms."