Mortgage lending will be negative next year for the first time on record and 75,000 people will have their homes repossessed, the Council of Mortgage Lenders predicted today.

The group expects the number of people who lose their homes to soar by 67% from 45,000 this year, and it predicts 500,000 people will fall at least three months behind with mortgage repayments as the economic downturn intensifies. The mortgage drought will also contribute to a further drop in the number of homes changing hands, with only 700,000 transactions taking place during the year, down from 900,000 this year and 1.63 million in 2007.

But it is the forecast that mortgage repayments will outstrip new lending during 2009 for the first year since records began in 1964 that is the most startling figure among the predictions.

The CML expects net lending, which strips out repayments and people remortgaging, to fall to minus £25bn next year as the problems in the mortgage market continue.

The forecast is well down on net lending of around £40bn this year and £108bn in 2007 — a level that the Government has urged the industry to replicate next year. Economists described the prediction as being dire, and warned that it suggested the housing market would take longer to recover, and the recession would be longer and deeper than previously thought.

David Page, of Investec Securities, said: “If net lending does prove to be as low as that, we really would be looking at a severe downturn. The pace of house price declines this year could also be repeated.”

Ray Boulger, senior technical manager at John Charcol, said: “The figure is much worse than we were anticipating and emphasises why the Government needs to intervene.”

He said the only way lending could be higher than this was if the Government implemented the proposals put forward by Sir James Crosby in his review of mortgage finance quicker than they currently planned to.