More than 30,000 people could see their homes repossessed during 2008, economic consultant the Centre for Economics and Business Research (CEBR) has warned.

According to the group's latest consumer and housing prospects report, around 33,400 people could lose their homes this year - 23% more than last year - while mortgage deals are also set to remain expensive despite cuts in official interest rates.

The stark prediction comes despite the Bank of England's £50bn bid to tackle the crisis by allowing banks to swap their riskier assets for safer ones in an attempt to kick-start credit markets.

John Ward, CEBR managing economist, said: "Unless or until this tap of mortgage finance starts to flow again, the outcome will be a reduction in house prices and an increase in repossessions."

Banks have been striving to put their finances in order after billions in losses on mortgage-based investments after the US housing market crisis.

This has sent borrowing costs soaring as banks become more cautious over lending to each other - squeezing first-time buyers and those without hefty deposits out of the market - as well as hiking up remortgaging costs.

Figures from the British Bankers' Association have shown the number of mortgages approved for people buying a home dived by 46% during the past year to 35,417 in March.

The CEBR added that repossessions would stay well below the 75,000 a year levels seen in the early 1990s amid spiralling interest rates.

It predicts unemployment rates will stay below 3.5% and the housing market will begin to recover in 2010 after interest rates fall as low as 3.5% towards the end of next year.

But the consultant predicts a tougher time for estate agents and others dependent on housing deals with a 25% fall in transactions forecasted.

Last week the National Association of Estate Agents said agents had sold an average of just seven properties each during March, compared with 14 per agent in March 2007.

It said the "depressingly low" number was due to buyers adopting a wait and see approach.

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