The cost of the typical home loan has soared to a seven year high mortgage bills more than 20% higher than two years ago as the effects of the credit crunch take their toll. Daily Telegraph

Bank of England figures show that the typical homeowner is paying £135 more a month for their mortgage than last year, prompting fears of a rise in home repossessions as people struggle to pay debts.

The Bank is under pressure to cut interest rates further when it makes its monthly announcement on Thursday.

Most economists expect a series of cuts in the base rate this year following December’s drop, although expert opinion is split as to whether the first reduction of 2008 will come this month or in February.