The number of homes repossessed by mortgage lenders has risen by 12% to 11,300 in the last three months, new figures have shown.

The Council of Mortgage Lenders (CML) also said 1.44% of mortgages were at least three months in arrears as at the end of September 2008.

The number of cases in arrears at the end of September was 168,000, 8% higher than the 155,600 at the end of June.

Unsurprisingly in a worsening economy, the number of households in arrears by the end of the year is likely to exceed the previous forecast of 170,000.

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CML Director General Michael Coogan however, said its forecast for the year had not changed in the light of the new figures, but he added it would be "premature" to predict what might happen in 2009.

Mr Coogan said: "While lending in October ticked up from a low figure in the preceding month, the outlook is one of continuing weakness for housing and mortgage markets in the coming months, despite the Bank rate cuts in October and November.

"Consumer confidence is now being affected by the worsening economic outlook. However, any recovery in lending is also being held back by the continuing shortage of mortgage funding.

"The Government should therefore publish the delayed Crosby Review as part of the forthcoming Pre-Budget Report and announce concrete steps that will enable and encourage firms to increase mortgage loans."

He also said it was generally not in lenders’ interests to repossess properties, and added the government needed to play its role in easing the situation in the Chancellor’s Pre-Budget Report.

(JM)