The number of properties repossessed by mortgage lenders rose by 17 per cent year on year to 1,330 in the fourth quarter of 2019, according to figures from UK Finance.

The trade body says the increase is driven by a backlog of historic cases which are now being processed following regulatory changes.

The number of borrowers in arrears of 2.5 per cent  or more of their outstanding balance dropped by 9 per cent year-on-year to 70,880.

Those in more severe arrears of 10 per cent or more of their outstanding balance also dropped by 9 per cent to 21,770.

Repossessions of buy-to-let properties increased by 20 per cent to 660.

Buy-to-let arrears also shrank with landlords behind on 2.5 per cent of their balance down by seven per cent year-on-year and those in 10 per cent arrears down by 3 per cent.

SPF Private Clients chief executive Mark Harris says: “With interest rates so low, one would hope that the vast majority of borrowers are managing to pay their mortgages in full and on time each month. 

“The number of homeowners in arrears remains at historically low levels, and although the number of homes being repossessed has risen, UK Finance points out that this is from a very low base.

“Mortgage prisoners are among those most likely to find themselves in financial difficulty.

“It is vital that lenders and the regulator work together to find a workable solution for these borrowers.”

North London estate agent Jeremy Leaf adds: “As the market slowly recovers it would not be surprising to see lenders taking a more proactive stance when it comes to repossessions as they will see, like the rest of us, that not only can the property in question be sold but possibly at a better price than they would have anticipated previously.”