The number of claims made by banks and landlords to repossess homes in England and Wales has reached the highest level in five years as households struggle with higher borrowing costs.

Figures from the Ministry of Justice show mortgage possession claims made by lenders in the county courts reached 5,343 in the three months to the end of June, up 34% on a year earlier, to hit the highest level since the first quarter of 2019.

Landlord possession claims also increased by 9% year on year to 24,495 – among the highest levels since 2019 – as private and social tenants struggled to keep up with paying the rent.

Possession claims occur when lenders or landlords take homeowners or tenants to court to try to repossess their homes. While claims have increased recently, they still remain below pre-Covid levels, despite the Bank of England’s toughest cycle of interest rate increases in decades.

Highlighting the impact of tougher mortgage rules introduced after the 2008 financial crisis, possession claims also remain significantly lower than a peak of 26,419 recorded in the second quarter of 2009.

Millions of mortgage borrowers have faced a big rise in repayments after 14 consecutive Bank of England rate increases in response to the highest levels of inflation since the early 1980s.

Threadneedle Street last week cut interest rates for the first time since the Covid pandemic, from 5.25% to 5%. The Bank had steadily increased its key base rate from 0.1% in December 2021.

Inflation has fallen back to the Bank’s 2% target, from a peak of 11.1% in October 2022.

Regulators introduced guidance to avoid possession proceedings during the height of the pandemic, while Britain’s biggest banks agreed last year to offer 12-month grace periods to help struggling mortgage holders amid the cost of living crisis.

While mortgage possessions remain historically low, borrowers have faced billions of pounds in additional mortgage repayments, hitting living standards and tipping the UK economy into recession last year as households cut back on other spending.

Still, many households face the rising risk of losing their homes. The latest figures show London had the highest rate of claims for mortgage and private landlord possessions; Newham, in the east of the capital, is in the top 10 for both categories.

Separate government figures reveal that statutory homelessness assessments in England increased to 94,560 in the first three months of 2024, up 10.8% compared with the first quarter of last year.

Aza Teeuwen, portfolio manager at TwentyFour Income Fund, said: “As expected, arrears are slowly increasing, but the actual repossessions are still very low compared to historical standards, which is mostly the result of active servicing done by the banks who are now, more than historically, working with their borrowers to bring them back on track.”