More than a million British householders with interest-only mortgages face a financial crisis when they have to cover the final bill, a financial regulator has warned.
The Financial Conduct Authority (FCA), UK’s independent conduct of business regulator said in a report that almost half of 2.6 million people with interest-only mortgages may not have enough saving or other funds to pay off their home loans when they came due.
According to the research, the average shortfall is £71,000.
The FCA also warned only one in 10 borrowers has plans for repaying their debt, adding that at-risk borrowers could end up losing their homes in order to pay the loans back.
Martin Wheatley, chief executive of the FCA, said many of loans were taken out before the financial crunch, “when there was a lot of optimism about rising house prices and wages”.
A research by YouGov for the housing and homeless charity Shelter revealed earlier that over five million families with children across Britain were forced to cut back on food last year to meet their rent or mortgage costs at a time of economic crisis in the country.