"The people who will be facing these bills will have a very different customer profile at the expiry of their mortgage than they did 25 years earlier"
That number equates to about 15% of the 1.7m British borrowers who currently have an interest-only mortgage.
The figures have been calculated by Vector, Kensington’s predictive mortgage analysis technology. The predictive model strips out the number of property owners who would be expected to find a new mortgage, or who would have sold the house at a profit and moved home.
Additionally, Vector shows that the interest-only mortgage problem is predicted to escalate over the next two decades.
By January 2029, almost 860,000 interest-only mortgages will have reached the end of their term and roughly half of those borrowers, or 430,000 homeowners, are forecast to get to the end of their mortgage term without having found a new deal.
Mark Arnold, chief executive at Kensington Mortgages, said: “This is a big problem that is lurking in Britain’s financial system. It’s important that people start thinking about this issue now, before thousands of homeowners find themselves facing a giant repayment bill that they are unable to deal with.
“Society has changed a great deal in recent years. Yet the big banks, driven by risk considerations, now lend to fewer and fewer people. The people who will be facing these bills will have a very different customer profile at the expiry of their mortgage than they did 25 years earlier when they took out these products. Many will have retired. Of those who are still working, many are likely now to be self-employed. Some may have moved from full-time work into the gig economy. They could still be fantastic borrowers, but these are families that won’t necessarily be able to tick all the boxes when they come to ask one of the big banks for a new loan. Yet there are lenders out there with the systems in place to be able to think about more complex situations."
