Britain's financial regulator has warned that more than one million families in the UK risk losing their homes in the next 18 months as a result of the global credit crunch.

With large mortgages and debts on the increase, the news that banks are becoming increasingly wary of lending money will see many people financially stretched to breaking point; especially those who are coming out of a fixed-rate term on their home loan and are now unable to switch to a cheaper deal.

The Financial Services Authority (FSA) have released figures showing that nearly one-fifth of people who took out a mortgage between April 2005 and September 2007, which equates to just over one million people, are at risk of having their home repossessed. This number does include people who took out their first home loan and those who re-mortgaged from one deal to another.

The FSA warn that this group of people qualify for having two or more of the ‘high-risk' factors they have drawn up for people who borrowed during a time when property prices were on the increase.

The criteria outlined for meeting these ‘high-risk' factors are people that put down a deposit of 10 per cent or less on a home, those who took out a mortgage for 25 years or longer, or people borrowing more than 3.5 times their annual salary. The FSA have identified around 150,000 borrowers who share all three of these factors and have advised that these are the people most at risk of having their homes reclaimed.

The last time figures for repossessions were at a record high was 1991, but the total then was only 75,540, half of what has been estimated this time round, according to the Council of Mortgage Lenders (CML).

They confirmed that the number of homes repossessed by mortgage lenders had risen by an astonishing 21 per cent during 2007 and were the highest figures since 1999. On top of this, the number of borrowers who found themselves at least thee months in arrears on mortgage repayments had also risen by 8.6 per cent to 129,800.

The CML argued that the rise in the number of people struggling with mortgage related debts had followed three base rate rises in the first half of 2007 and a stricter outlook on lending criteria caused by the credit crunch.

They also claim that despite the repossession figures being at their worst for some years, they are better than forecast by the industry, down 10 per cent. This represents less than one in 400 of the 11.8 million mortgages in Britain.

Of the other 900,000 or so homeowners identified at being at risk by the FSA, they are said to be facing ‘financial difficulty', which may include repossession, but could also involve simply missing a monthly repayment, or payment of a bill.

Head of financial strategy and risk at the FSA, Lyndon Nelson warned, "It may not be mortgages which tip people over the edge, other debts such as personal loans, credit cards and overdrafts could cause the problems."

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