Despite the review’s authors attempting to dispel the hype of a ‘ticking time bomb’ by claiming repossessions were being used as a last resort, Mr Robb said: “Without a repayment plan in place they could find themselves at serious risk of losing their home.
“Sadly at Shelter we see all too often the devastation that repossession causes. Anyone who has an interest-only mortgage should get advice early to give them the best possible chance of keeping their home.
“Worryingly many of those borrowers will find they don’t actually own their home when their mortgage ends and instead will be left with a substantial shortfall to pay.”
Shelter’s warnings were echoed by Gillian Guy, chief executive of the Citizen’s Advice Bureau, who said it had received more than 6000 requests for online advice on dealing with shortfalls in the past 12 months.
She added: “People are getting increasingly worried about this. It is vital that interest-only mortgage customers are aware of how much they have to repay and when.”
The FCA’s review stated that lenders were employing “extensive” post-maturity levels of forbearance.
The government’s homes and communities agency administers a mortgage rescue scheme for homeowners who are unable to fulfill their mortgage obligations.
A spokesman said that some 4413 households had completed the full process to remain in their homes to date.
The FCA’s thematic review revealed that while 90 per cent of customers had a repayment vehicle, some 37 per cent of consumers had a “definite or possible shortfall”.
The shortfalls ranged from the FCA’s own modelling which averaged £22,000, to GfK’s research which revealed that 34 per cent of mortgages that will mature before 2022 could result in a shortfall of £50,000 or more.
David Hollingworth, communications manager for London-based mortgage broker London & Country, said: “People need to take action and the worst thing they can do is delay that action. It’s also very important to revisit a repayment plan regularly to ensure it continues to work.”