Homeowners are being advised to plan ahead for next year after warnings that market conditions could worsen during 2008.

Millions of people across the country are preparing to remortgage their homes next year, many of whom are currently on deals which date back to a stronger period in the market with lower interest rates.

The cost of borrowing has risen five times in the last year and there are fears that many homeowners may struggle to cope with newly increased payments.

Mortgage lenders across the Bradford district have all recommended that homeowners whose current deal ends in 2008 should begin planning ahead now and to stay in close contact with their lender if they feel they may be unable to meet any increased mortgage premiums.

The call comes after city watchdog the Financial Services Authority (FSA) warned that there was a "very real prospect" that recent troubles in the mortgage market will continue to worsen next year in terms of both liquidity and credit risks.

Clive Briault, FSA retail managing director, said the number of people falling behind with mortgage repayments had increased "significantly" in the challenging economic environment, and that it was more difficult to fund a sympathetic approach in the current conditions.

He urged lenders to treat people who were unable to keep up with their mortgage repayments fairly and to negotiate with them to try to help them keep their homes.

Tim Anson, head of residential lending at Bradford & Bingley, said: "Borrowers coming to the end of fixed rate deals are currently facing the double whammy of higher mortgage repayments following five base rate rises since August last year and a tougher credit environment.

"Therefore, it is important that borrowers nearing the end of their mortgage deal seek financial advice and leave themselves plenty of time to find a new mortgage deal that will suit their circumstances. Should a borrower find themselves struggling to meet their monthly mortgage payments however, it is important that they contact their lender as soon as possible.

"Repossession is always a last resort and we will always work with the customer, wherever possible, to come up with an affordable repayment plan and keep them in their homes."

A spokesman for Yorkshire Building Society said that anyone with concerns over making repayments should come and talk to them as soon as possible, rather than missing them.

"If people get a payment shock they should go and talk to their lender as soon as possible."

A spokesman for Skipton Building Society, said that recent rises in interest rates follow their having fallen to their lowest rate for more than ten years and needed to be taken in that context.

She said: "We would urge people to consider their finances if they are now near the end of their deals.

"They might want to consider remortgaging now and paying an early redemption charge or start putting a little bit away or making overpayments."

She also recommended that any customers with concerns over making repayments should get in touch as soon as possible.

email - mark.casci @bradford.newsquest.co.uk