A rise in repossessions would fuel speculation the economy is on the brink of a recession.

The news comes in the wake of rising interest rates and declining business confidence.

Michael Coogan of the Council of Mortgage Lenders and Chris Holmes of Shelter, on Radio Four's 'Today'

In a BBC interview, the housing charity Shelter called on the government to introduce a new form of mortgage benefit to help low income home owners struggling to pay off loans.

It suggested funding the scheme by axing Miras - mortgage interest tax relief - to cut repossessions.

Lenders expected to take back more properties

A Shelter spokesperson said: "I think the most important change would be to bring in a scheme of mortgage benefit help to lower income home owners in the same way as tenants get help with housing benefit.

''That should be funded by reallocating the current spending on mortgage interest tax relief so that should be phased out completely and the money better targeted away from those who don't need it towards people on low incomes who desperately need that support in times of difficulty."

Boom and bust in the 1980s

Repossessions last rocketed in the late 1980s and early 1990s following the housing market crash.

Many blamed the then Chancellor Nigel Lawson's sudden decision to end double mortgage interest tax relief in August 1988.

This meant couples could no longer both claim 30% relief on the first £60,000 of a mortgage.

The announcement saw thousands of people rushing to buy before the deadline, sending prices spiralling.

The subsequent crash left thousands of home owners with negative equity.

Over the last 10 years successive chancellors have gradually eroded Miras. Now borrowers get 10% relief on the first £30,000 of their mortgage.