Many of the four million homeowners who took out interest-only mortgages are facing a crisis because they have no way of repaying their home loans.

Figures from the Financial Services Authority, which has regulated mortgages since 2004, show that 38% of Britain’s 11.1m homeowners — or more than one in three — may have made inadequate provision to pay off their capital sum.

Many are in negative equity and the savings products taken out to cover the capital repayments have fallen short. That 38% figure does not include those with endowments or buy-to-let investors who took out interest-only mortgages to keep the cost down.

Financial Times