The UK’s housing market is set to experience a “painful correction”, according to the Liberal Democrats’ economic spokesperson Vince Cable.

Mr Cable is convinced that debt management problems are worsening for many thousands of families and the housing sector is suffering as a result.

An abundance of easily accessible credit has seen households across the country accumulate large amounts of debt that they are now finding it difficult to service and to pay off, the opposition MP has claimed.

“Homeowners are having to deal with increased interest payments as their fixed-term mortgages come up for renewal. Large numbers of households simply cannot afford to pay,” said Mr Cable.

He added that an “epidemic of repossessions” is likely unless the government can take the steps necessary to ease the problems in the property markets.

Earlier this week, the Cheshire Building Society urged people struggling to become debt free to seek professional advice before their money problems become unmanageable.

The Bank of England has opted to cut the base rate of interest by a quarter-point to five per cent, it has been announced.

With millions of consumers struggling to maintain control of their debt management problems, the base rate reduction has been widely welcomed but experts are unsure about how much impact the decision will have.

A statement from Abbey said: “It is unclear whether the size of the rate cut provides the adrenaline shot needed to restore confidence amongst borrower.”

The banking group went on to point out that the cut in the cost of borrowing will take some time to feed through into the overall economy and provide any kind of boost for household finances.

Borrowing costs were cut by a quarter-point in December of last year and February 2008 but for millions of families the action has not prevented debt problems from worsening.

The International Monetary Fund (IMF) has predicted that economic growth in the UK will fall short of the government estimates made earlier this year.

According to the fund, the economic issues affecting the US will have a notably impact in Britain, which could ultimately leave many families facing dire debt management problems.

In response to the report from the IMF, the Conservative Party has blamed prime minister Gordon Brown and suggested that he is out of touch with the financial reality that faces households around the country.

“This worrying report adds to the growing evidence that Gordon Brown’s economic incompetence has left Britain badly prepared,” said shadow chief secretary to the Treasury Philip Hammond.

“And in the face of this urgent economic crisis, all the Government can do is dither and delay,” he added.

Earlier this week, Halifax revealed that the typical house price in the UK fell by around 2.5 per cent over the course of March, sparking further fears of an economic crisis.