Home repossessions increased by 20% in 2007 to reach an eight-year high, figures have shown.

The Council of Mortgage Lenders said 27,100 homes were taken back by lenders after owners failed to keep up with mortgage repayments - the equivalent of 0.23% of all mortgages.

And the group said that 1% of all loan repayments during the year were in arrears for more than three months - a rise of nearly 9% to 129,800.

However, the CML added that the figure was well down on the high of 75,540 repossessions reached during the house price crash in 1991.

Overall, fewer than one in 400 mortgages led to a home being repossessed during the year, less than half the level seen during the first half of the 1990s.

And just 13,500 homes were taken over by lenders during the final six months of the year, compared with 13,600 during the first half, with the predicted increase in repossessions during the course of 2007 failing to materialise.

The CML said the rise in repossessions from their recent low of fewer than 10,000 a year in 2003 and 2004 represented only a tiny fraction of all home loans.

But it said funding pressures on lenders as a result of the credit crunch were limiting the mortgages available to people with poor credit histories, and this could affect arrears and repossessions.

Michael Coogan, director general of the CML, said: "Lenders take their responsibilities to borrowers facing repayment difficulties very seriously, and many go to exceptional lengths to provide debt counselling, reschedule payments, extend loan terms, or in some circumstances even allow payment breaks.

"Despite this, the number of repossessions is likely to be higher in 2008 as a result of wider issues in the economy and the mortgage funding markets."

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The more challenging climate for the housing market will lead to a rise in repossessions over the course of 2008.

"However, timely action by the Bank of England should help offset some of the pain being felt by homeowners resulting from the credit crunch and the reset of fixed-rate mortgages that are now due for renewal."

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