Home repossessions could soar to 175,000 in 2012 if the Government fails to tackle the UK's deficit, it was warned today.
The figure represents a "doomsday scenario" under which unemployment peaks at 11.4% in 2011 and interest rates rise rapidly, possibly due to a sovereign debt crisis.
But the report, which was commissioned under the Labour government but never published, stressed the scenario was unlikely to happen.
It added that if unemployment fell rapidly after the first quarter of next year, interest rates remained low and house prices rose sharply, it was possible fewer than 33,000 homes would be repossessed during 2012.
Overall, the report found the combination of greater tolerance from lenders and the help available to homeowners through Government schemes had had a notable effect in keeping repossession numbers down.
But it warned the risk of increased numbers of repossessions would remain high in the years ahead.
The study, by Professor John Muellbauer and Dr Janine Aron of Oxford University, was published as housing minister Grant Shapps said schemes introduced by the previous Government to help homeowners struggling with their mortgage would be maintained.
The Homeowners Mortgage Support Scheme, under which people who experience a sudden loss in their income can defer interest payments on up to 70% of their mortgage for two years, will run until April 2011 as previously planned.
The scheme, which was launch by then the housing minister Margaret Beckett in April 2009, has come in for criticism after many lenders failed to sign up to it, while it helped only 34 households in the first year after it was launched.
But despite this, the report said it had helped to reduce repossessions by encouraging greater lender forbearance.
Mr Shapps said the Mortgage Rescue Scheme, under which vulnerable households can sell some or all of their property to a registered social landlord and rent it back again, would also continue until the spending review in October.
But in order to ensure that the funding lasts, the Government is reducing the grant it gives housing associations towards the purchase price of a property from 65% to 55%.
It is also introducing tighter caps on property price and repair costs.
The Department for Communities and Local Government will also step up work with organisations such as Citizens Advice and Shelter - as well as Martin Lewis, creator of MoneySavingExpert.com - to promote the help available to struggling homeowners.
Mr Shapps said: "The most effective thing the Government can do for homeowners is to tackle the record deficit and avoid the need for rapid increases in interest rates.
"But there must still be effective help on hand for those struggling to pay their mortgages."
The Council of Mortgage Lenders has forecast that 53,000 people will lose their homes in 2010, although it recently said the figure may be too pessimistic.
However, while it has not issued forecasts for the years ahead, it has indicated that it expects repossessions to remain at around this level for several years.Reuse content