By the end of next year, 500,000 households could be more than three months behind with their repayments.

The Council of Mortgage Lenders (CML) has predicted a huge rise in arrears among their borrowers in the coming year.

It expects the number of households more than three months behind with their repayments to reach 500,000 by the end of 2009 – double the expected figure of 210,000 for this year.

The CML said next year would be “very tough” because the impending economic recession would drive up unemployment and lead to 75,000 repossessions.

Gross mortgage lending reached an estimated £14.6 billion in November – a 22% fall from October and a 51% fall from November last year.

While there is typically a decline from October to November, CML said this is considerably larger than usual reflecting the market disruption and continued deterioration of confidence in the economy.

It also revealed its expectations for housing market activity, estimating around 700,000 housing transactions in 2009, down from around 900,000 this year and 1.6 million in 2007.

Michael Coogan, CML Director General, said: “In looking ahead to the coming year, the housing market will remain extremely subdued and net mortgage lending is likely to turn negative.

Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers.

“Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful, but more will be needed. 2009 will be a challenging year, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates.”

The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.7 million mortgages in the UK, with loans worth over £1.2 trillion.