There has been a sharp rise in the number of mortgage deals foreclosed by banks, it has emerged.

According to figures from Realtytrac, the number has increased by 55 per cent over the past year.

The figures provide a stark illustration of the problems faced by the US housing market, which has been hit hard by the credit crunch, which is now in its 13 month.

Over 272,000 people received a foreclosure notice in July and some 77,000 properties were repossessed by banks.

As a result, a 17 per cent of the homes offered for sale are foreclosure properties.

Florida and California have been especially affected by the rise in foreclosures, according to the report.

Earlier this month, it was reported by the British Broadcasting Corporation that many Americans are walking away from their mortgages and allowing the banks to foreclose on their homes.

Other homeowners are turning to pay day loans to help pay their mortgage, according to the Consumer Credit Counseling Service of Greater New Orleans.

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