The Sterling Crisis: Families fear a rising tide of debt: The homeowners

'I AM ashamed to say I voted Tory at the election,' admitted David White, after he had discussed his financial position with his bank manager.

Mr White, 45, from Leavesden, Watford, lives with his partner, Bernadette, in a semi-detached house and pays pounds 500 a month on a pounds 51,000 mortgage. 'It will cripple us, I just hope we don't lose the house,' he said.

Although Mr White is working at present as a self-employed builder he is worried about the 'knock-on effect'. He added: 'Nobody will be investing. There just won't be a need for builders, I can't see it getting any better for at least two years.'

Bernadette Oakes, 39, a gardener, said that if the recession continued they would be forced to sell the house. 'I don't think we will lose on it, and we've made all the cuts we can do really,' she said.

This year, they were both out of work for several months and had to borrow pounds 3,000 from the bank to pay the mortgage and bills. Mr White also owes pounds 1,500 to credit card companies. 'We owe more than we earn at the moment, the only way out I can see is to die,' he said.

Rowena Jones, Mr White's neighbour, was equally concerned about her finances. At the moment, her pounds 580 mortgage is paid for by her boyfriend. 'If it goes up by even pounds 10 then we will have to make cuts and the children will suffer,' she said.

Mrs Jones, who is separated from her husband and has three children, receives pounds 101 child benefit a month. 'I'm not entitled to anything else because our joint savings are frozen at the moment, but the social security thinks I can live off that,' she said.

Although Mrs Jones did not vote at the election because she was out of the country, she would have voted Conservative. 'I felt they would make things easier for us, but now I am shocked,' she said. Her ex-husband has left his job as a court bailiff to become a student and so his maintenance contributions will be cut.

'I am relying solely upon my boyfriend and he has a family to support as well, although he does not have to pay their mortgage,' she said.

Before her separation, Mrs Jones tried to sell the house because they could not afford the mortgage. It was on the market for 18 months at pounds 125,000. 'We took it off in January, it was useless, we would be lucky if we got pounds 80,000 for it now,' she said.

Advice workers warned yesterday that any interest rate rise would mean many debtors would give up any attempt to pay off their arrears.

Carefully constructed repayment schedules would be destroyed by a large rise in the cost of borrowing. The number of repossessions, currently about 75,000 a year, would rise.

Angela Hammond, money adviser at Gloucester Citizens' Advice Bureau, predicted a wave of new problems. 'A lot of people, through no fault of their own, are struggling to keep up with part payments. If they see the goal they are trying to maintain, which is financial stability, move further out of reach, they are going to give up,' she said.

More than 300,000 households are believed to have mortgage debts of more than six months leading to fears of more repossessions.

Andy Lane, of the Oxfordshire Money Advice Project, said the threat of a rate rise could not have come at a worse time. 'The artificial lid on repossessions is going to be blown off. You don't have to be a genius to realise what effect this sort of increase is going to have on hundreds of thousands of people,' he declared.

All advice services are busy negotiating repayment schemes for the 37,000 households under suspended repossession orders.

Mick Marvell, of Leicester Money Advice, said: 'Many people are in schemes that are only just working at the present rate. It is going to shove most of them over.'

The advice agencies urged people in difficulty to contact their lenders as soon as possible, and not to wait until they were heavily in arrears.

(Photograph omitted)