'Credit crunch' causing financial worries for many

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Around 123 homes will be repossessed every day this year as people struggle to keep up with mortgage repayments.

The Royal Institution of Chartered Surveyors (RICS) said just under 45,000 people will lose their homes during the year as the cost of servicing a mortgage remains close to record levels.

The figure is in line with estimates from the Council of Mortgage Lenders, which also expects 45,000 homes to be taken over by lenders.

City watchdog the Financial Services Authority said on Monday that 840,000 mortgages were a "cause for concern" because of their riskier lending characteristics.

At the same time RICS said the cost of getting on to the property ladder was now 351% more expensive than at its most accessible point in 1996.

It said a first-time buyer couple who were both on the bottom 25% of earnings, bringing in £26,595 a year after tax, would now have to save the equivalent of 104% of their joint annual take-home pay, or £27,729, in order to afford the deposit, fees and stamp duty they would have to pay to buy a typical home.

RICS senior economist David Stubbs said: "At the start of 2008, first-time buyers are finding it even harder to get a foothold on the housing ladder and the signs are that conditions are unlikely to get better in the short term.

"Mortgage lenders are demanding ever higher deposits as the credit crunch continues to take effect.

"Those who are struggling with mortgage repayments are still faced with paying a large percentage of take-home pay but there may be some release of pressure as earnings continue to rise.

"If the Bank of England cuts interest rates next week, many will breathe a sigh of relief."