Mortgage borrowers have been told they must get their finances in order before the base rate starts to rise to avoid being caught unaware by higher monthly mortgage costs.
The warning comes after it was revealed a total of 9,100 homes were repossessed in the first three months of 2011.
The Council of Mortgage Lenders (CML) said the figure was 15% higher than in the previous quarter, although it had dropped by 10% compared with the same period in 2010.
Although the data also revealed that the total number of homeowners behind on their mortgage payments had continued to fall, the CML warned that the financial position of many households is likely to be stretched for some time.
Michael Coogan, director general of the trade body, said that lenders were reluctant to repossess homes too quickly and have a range of options 'to nurse borrowers through temporary problems'.
Responding to the data, however, Ian Long, managing director of St Trinity Asset Management, warned it is record low interest rates that have played the crucial role in keeping a lid on arrears and repossessions in the past year.
Pointing out that tracker rates and standard variable rates (SVRs) have been 'bumping along the bottom', Mr Long said millions of mortgage holders have been facing exceptionally low monthly payments.
"However, this shouldn't create a false sense of security for borrowers," he added.
"As inflation continues to soar, household budgets are already beginning to feel the squeeze of higher living costs and we are beginning to see the impact of public spending cuts ripple through the labour market.
"It is crucial that when interest rates are hiked, borrowers have their finances in order and are not taken unawares by higher monthly costs.
"The CML forecasted that there will be 40,000 repossessions this year, but if the bank rate is hiked earlier – or more severely - than anticipated, this figure may well prove to be a huge underestimate."
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