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With the cost of mortgages increasing, the number of repossessions has been forecast by the Council of Mortgage Lenders (CML) to reach 45,000 this year. However, new data from the Ministry of Justice suggests that it may well exceed this figure. (See story.)

In the first quarter of 2008 mortgage possession claims reached 38,688 in England and Wales. This compared with 33,344 during the same period of 2007.

Speaking at the Mortgage Business Expo in Manchester, Jonathan Fischel, head of mortgages and credit unions at the FSA, said it was aware that lenders are being too quick to repossess rather than it being a last resort.

"We expect lenders to meet the requirements of the treatment of customers in payment difficulty as set out in the rules," he said.

As a result, the regulator wants to see lenders work more closely with clients to help keep them in their homes rather than see the case go quickly to court.

The FSA will publish the first stage of its findings in June.