Banks who repossessed more than 27,000 homes last year have been criticised for failing to help struggling customers.

Figures released today by the Council of Mortgage Lenders show a 21 per cent rise in the number of homes taken over by banks compared to 2006.

And with the credit crunch tightening, lenders have been told to do more to help cash-strapped borrowers.

“Our evidence shows that lenders are not always doing everything they can to help borrowers in trouble, all too often piling on extra charges and being too quick to take court action rather than being prepared to negotiate affordable repayment arrangements,” said Sue Edwards, head of consumer policy at Citizens Advice.

“We want to see all lenders being reasonable when dealing with customers who do get into trouble, and taking court action for possession only as a last resort.”

“Anyone who thinks they might be heading into difficulty should contact their lender, as problems are easier to resolve if they are tackled at an early stage,” advised CML Director General Michael Coogan. “Lenders want to avoid repossessions just as much as borrowers do.”