Households are finding it steadily harder to pay their debts on time, with the number of subprime mortgage holders falling behind on payments at its highest ever.

Standard & Poor’s, the credit ratings agency, examined the performance of loans bundled into securities – bonds or notes – and sold to investors. The rate of delinquent or overdue payments, particularly those late by 90 days or more, are a leading indicator of the losses that lenders are likely to make on those loans.

The data show that 'non-conforming' or sub-prime mortgages – home loans to people with patchy credit histories – hit a record delinquency rate in the fourth quarter of 2008, rising to 28.6 % of all such loans outstanding.

S&P notes that the stock of repossessed homes now stands at 3.5%, up from 2.8% at the end of the third quarter and 1.6% in the first period.

It also comments on 'an increase in time between repossession and sale, given the current low number of housing transactions in the UK'.

Financial Times