The leader of the Liberal Democrats has urged the Government to ban home repossessions over Christmas, as he warned of a looming “mortgage nightmare” due to soaring monthly payments.

Sir Ed Davey said “no-one should face losing their home” over the festive period after mortgage rates jumped amid the market turmoil unleashed by Liz Truss’s mini-budget earlier this autumn.

Mortgage rates have also climbed as the Bank of England base rate has risen in recent months.

The Lib Dems are proposing a mortgage protection fund, which would provide grants of up to £300 a month for a year to homeowners seeing their mortgage payments rise by more than 10% of their household income.

The party points to data from UK finance suggesting that around 62,500 mortgage-holders will see their fixed-rate deals expire by the end of the year, with many being moved to higher rates that could hike yearly payments by around £3,000.

The Government should also immediately bring back pandemic-era protections for renters amid soaring prices, including a ban on no-fault evictions, as well as evictions based on rent arrears, the Lib Dems said.

Sir Ed said: “Thousands of families are facing a nightmare before Christmas as their monthly mortgage payments go through the roof.

“The Conservative government put hundreds of pounds on people’s mortgages through their disastrous mini-budget. The very least they could now do is to take responsibility for fixing this mess and protecting homeowners on the brink.

“Jeremy Hunt must act now before it’s too late, by bringing in a temporary ban on home repossessions and a mortgage rescue fund to support those hardest hit. The Government must also finally bring in its long-promised ban on no-fault evictions to protect renters at risk of homelessness this winter.

“No-one should face losing their home this Christmas because the Conservative government crashed the economy.”