Repossessions up 71 per cent

The figures suggest half a million homeowners could face the same fate.

Chief executive of Citizens Advice David Harker said: “Anyone who is worried about debt should seek advice straight away.

“Get help from your local Citizens Advice Bureau or other free independent advice agency, who can help you out with payment options, check you are receiving all the benefits you are entitled to and help you claim any money that could off-set your costs.

“Up to £9.9billion means-tested benefits went unclaimed last year, and a free, confidential benefits check could ensure that you aren’t missing out on money that is rightfully yours.�

Mr Harker added it was lenders’ duty to help out.

He said: “To prevent the situation worsening, it is vital that mortgage lenders and fuel companies do everything in their power to help people in arrears to come to a workable solution over repayment arrangements, rather than piling on extra charges.

“All creditors should treat borrowers in arrears fairly and sympathetically, negotiate with borrowers in trouble and only use court action for mortgage arrears as a last resort.�

The FSA figures came from data from the Mortgage Lending Administration Returns provided by regulated firms.

The report reveals the total value of loans outstanding is at £1,178billion, which has increased 7.5 per cent on last year.

However, in the past quarter the rise is only one per cent.

Meanwhile, new lending peaked in the third quarter of last year at £102billion before dropping to £72billion in the second quarter of this year.