Last year saw 40,000 repossessions – representing one in every 290 mortgages.

Data released today by the Council of Mortgage Lenders (CML) show 10,400 properties were taken into possession by lenders in the fourth quarter of 2008, down slightly from 11,100 in the previous quarter but up 50 per cent from 6,900 in the fourth quarter of 2007.

The body claimed the fall in repossessions in the final quarter shows – despite the worsening economy – mortgage lenders “are making strenuous efforts to ensure that repossession really is a last resort”.

It added where struggling homeowners were working with lenders, in the vast majority of cases repossession is avoided.

CML director general Michael Coogan warned there was a “sharp rise” in cases of people not contacting their borrower and just handing back house keys

“We strongly urge borrowers to contact their lender and work with them before taking this step, as there may be other solutions,” he said.

“Borrowers are still liable for their debt, even if they leave the property, so working through their problems is much more likely to be in their best interests.

“We know the plethora of schemes and initiatives is daunting, and we are working closely with government and advice agencies to try to simplify the information available, and ensure that those borrowers who may qualify for help get access to the information and advice that they need at the right time.”

One in 64 mortgages is now in arrears of 2.5 per cent or more.

In 2008, 105,900 homeowners were between 2.5 per cent and five per cent in arrears – a 46 per cent increase on 2007.

Some 24,300 were over ten per cent in arrears.

The percentage of all mortgages in arrears is the highest since 2000.

By the end of last year, a total of 182,600 mortgages – or 1.57 per cent of all home loans – had accumulated arrears equivalent to 2.5 per cent or more of the outstanding balance – compared to 1.08 per cent at the end of 2007.

Alan Tomlinson, partner at insolvency practitioners Tomlinsons, said the CML figures were “a sad reflection of the deterioration of the economy and reflect just how serious things have become”.

He said: “Particularly ominous is the fact that the CML is sticking by its 2009 forecast of 75,000 repossessions.

“More and more people are approaching us for advice on dealing with excess credit accrued during the good times, which rapidly overwhelms them once their circumstances change.

“If you fall into arrears, there are certain things you should do immediately. Firstly, speak to your mortgage lender and tell them about your situation. Lenders are more likely to be accommodating if you keep them fully informed about your circumstances.”

He said if someone has lost their job they should check with a lender to se if they have mortgage payment protection insurance, which many people forget they have.

“And don’t think twice about getting state benefits. Jobseeker’s allowance will never replace your previous income but every penny counts while you are looking for a new job,” Mr Tomlinson said.

“Finally, if you are struggling because you have lost your job, make sure you have checked your employment contract to ensure you received the correct payoff, making sure it included any unused holiday.”

A total of 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 at the end of the third quarter of the year, and up from 127,500 at the end of 2007, the CML data show.

The CML warned the rapid fall in interest rates over 2008 skew figures for ‘months in arrears’ – the traditional measure – because as monthly repayments fall the amount a borrower is behind on a mortgage in terms of monthly payments grows.

It explained being £1,500 behind on a mortgage when interest rates and repayments were higher at the beginning of the year represented 2.4 months in arrears. But with lower repayments £1,500 would equate to four months in arrears

Instead the industry body preferred to use the measure of the percentage arrears represents of the outstanding balance of the mortgage.