The number of new arrears cases in the final quarter of 2010 was 38,800, 6% higher than last quarter, according to latest data from the FSA.

However, the total number of accounts in arrears at the end of 2010 was 343,400, unchanged from last quarter and 7% down on the end of 2009.

The proportion of the residential loan book that is in arrears barely changed at 2.95%.

The number of new possessions in the quarter continued to decline, decreasing by 10% to 8,246, the lowest figure for three years and arrears totalling £40 million on 13,764 accounts were capitalised in Q4.

Mark Pilling, managing director of Spicerhaart Corporate Sales, said: “The annual decrease in repossessions reported by the FSA is a positive sign. However