More than a million homebuyers – nearly half of those with interest-only mortgages – have no specific savings plan to repay their debts, an insurer claims.

LV=, formerly known as Liverpool Victoria, calculates that £66bn of home loans issued during the past five years were advanced without any formal agreement about how they would be repaid. Independent experts claim this is fresh evidence of reckless lending and borrowing, based on the belief that house prices could only go up.

Melanie Bien, of mortgage broker Savills, said: 'Many people went for interest-only mortgages with no capital repayment plans to keep monthly costs to a minimum and relied on bonuses to occasionally reduce their debts. Estimate of the value of home loans issued since 2003 without a formal repayment agreement '

Daily Telegraph