The new year could see an increase in repossessions and homelessness across Essex, two leading campaign groups have warned.

Despite recent cuts in interest rates, the two groups are warning that higher unemployment could result in a significant increase in mortgage arrears and so up repossessions and homelessness.

The warning of a bleak start to 1999 comes from the Child Poverty Action Group (CPAG) and Shelter as they launch the "Rights Guide for Home Owners" - an up-to-date guide to of their financial rights.

Although benefit rules have been severely restricted, only about one in three people with new mortgages has any payment insurance to cover housing costs during unemployment.

Shelter warned the new year will see an increase in the number of mortgage repossessions in this county.

David Elliott, Shelter caseworker for Essex and Suffolk, said: "There is strong evidence regarding the link between unemployment, benefit rules and mortgage repossession.

"Whenever possible Shelter tries to negotiate with mortgage lenders in order to prevent possession action being taken against home owners.

"It is Shelter's belief that an increase in unemployment in addition to the number of people in temporary or part-time work will result in an increase in mortgage repossessions.

"This could lead to an increase in the number of homelessness applications and an increase in housing benefit expenditure."

Child Poverty Action Group is calling on the Government to take urgent steps to support home owners who lose their jobs or face cuts in income.

Martin Barnes, director of CPAG, said: "The cost of mortgage repayments may be falling but thousands are losing their jobs and many more fear job losses in the new year.

"Mortgage arrears and repossessions reached record levels in the last recession. With fewer people eligible for housing costs support, even a mild slow down or recession could have a devastating effect on individuals, families and the housing market."

Since the last recession the benefit safety net for unemployed people with mortgages has been severely curtailed.

Until October 1995 up to half of mortgage interest payments could be paid from the start of a benefit claim.

Rule changes now mean that people with relatively new mortgages who lose their jobs get no help with mortgage payments for nine months.

Copies of the Rights Guide for Home Owners are available from Shelter Publications, 88 Old Street, London, EC1V 9HU.

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