The number of repossessions in Britain soared by 71 per cent in the three months to June after more than 11,050 people lost their homes.

According to the Financial Services Authority, the City regulator, the number of people losing their houses increased from 9,172 in the first three months of last year and rose from 6,476 repossessions between April and June last year.

The number of borrowers struggling to meet their monthly mortgage bills has also risen, with 312,000 new loans accounts falling into arrears between April and June, signalling a 16 per cent increase on the same period last year.

The Council of Mortgage Lenders has forecast that total repossessions this year will rise by 50 per cent to 45,000, and have given warning that the figure could rise again next year.

The Government has pledged to work with lenders to make sure that repossession is a last resort.

Last week, it introduced a new code for courts so that lenders must prove what action they have taken to try and keep borrowers in their homes before they can apply to possess a property.

The rise of people losing their homes emerged as official data showed that house prices slipped by 8 per cent in the year to September.

Land Registry figures, which lag other house price indicators as they reflect the prices paid for houses rather than mortgages approved, show that prices in England and Wales fell by 2.2 per cent in September, wiping nearly £4,000 off the value of an average home.

Recent research showed that tumbling house prices are pushing 60,000 homeowners a month into negative equity.

If prices continue to fall at the current rate, around one in six households could be in negative equity by 2010. Borrowers in negative equity who want to move house or who cannot meet their mortgage repayments are forced to sell their property at a loss.

But there are fears that house prices could continue to dip sharply as activity in the market continues to decline. The number of sales between April and July nearly halved compared with the same period the year before, the Land Registry figures show.

As the number of new buyers dwindle, vendors are forced to slash their prices in an effort to secure a sale.

Persimmon, the housebuilder, said yesterday that the proportion of new buyers changing their mind about buying a new home and foregoing their £700 deposit has risen to 35 per cent, up from between 15 and 20 per cent.

Some economists have forecast that house prices could fall by a total of 35 per cent from their peak last summer and may not recover until 2013.

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