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The FSA has published mortgage lending data covering the period from the first quarter of 2007 to the end of the second quarter of 2008.

It said that at the end of the second quarter, there were 312,000 loan accounts in arrears, an increase of 3 per cent on the first quarter of 2008 and 16 per cent up on a year earlier. The total amount of arrears now stands at £1.6bn.

However, the numbers of new possessions have also grown significantly since the third quarter last year, with 11,054 new cases in the second quarter of 2008. This is 71 per cent higher than a year earlier.

The total value of outstanding mortgage loans is now £1.17bn, a 7.5 per cent increase in outstanding loans compared to a year earlier, however quarterly growth continues to slow, with a second quarter increase of just 1 per cent.

New lending peaked in the third quarter of last year at £102bn before declining to £72bn in the second quarter of this year, making gross lending 26 per cent lower than a year previously.

The data showed that loans to borrowers with an impaired credit history represented 2.1 per cent of new lending in the second quarter, compared to 3.4 per cent a year earlier.

Commenting, Liberal Democrat Shadow Chancellor, Vince Cable said the figures reinforce the fact that the collapsing housing bubble will produce large numbers of casualties.

"If conditions deteriorate further, the current stream of repossessions will become a torrent."