Homeowners in their 50s with interest-only mortgages are sitting on a “ticking time bomb” that could have a devastating impact over the next decade, a regulator has warned.
Speaking in front of the House of Commons’ Treasury Select Committee, Martin Wheatley, a director at the Financial Services Authority (FSA), raised fears about interest-only deals coming to the end of their term where homeowners have no hope of paying off the loans.
Interest-only mortgages, where monthly repayments cover the interest to the lender but the capital does not have to be repaid until the end of the deal, were popular in the last property boom.
An estimated 1.5 million of the loans worth around £120 billion are due for repayment over the next 10 years and