One in every five homeowners in the UK with an interest only mortgage faces the real threat of not being able to repay their mortgage when the loan matures, according to a report by Ascent Performance Group.

The provider of outsourced debt solutions for lenders said its most recent analysis shows that when UK homeowners with interest only loans were asked how they intended to pay back the capital portion on their mortgage, only 43% said that they had a suitable financial vehicle to repay the loan.

Most worrying was the 20% who said that they had nothing in place or they didn’t know at this stage how they were going to pay back the capital lump sum.

The survey also revealed that 37% had a plan which either required being forced into downsizing and selling their current property, relying on their family for financial support, selling a second property or switching to more expensive repayment mortgage.

Niall Gilhooley, chief executive at Ascent, said: “Our findings highlight a potentially huge issue not only for homeowners, but also for lenders if they do not address the issues. We are aware of a number of responsible financial institutions taking proactive steps to deal with the problem, but it is certainly not as widespread an approach as might be expected.”

Ascent’s specialist division Ascent Contact carries out visits on behalf of lenders to ascertain how the capital on interest only loans will be paid back.

Its latest report into the issue follows a recent Financial Conduct Authority (FCA) paper which estimated that six million interest only mortgages will be due for repayment by 2020. The FCA’s study also pointed to a similar proportion to that identified by Ascent not having a repayment plan in place.

The FCA said that although 90% of lenders were generally endeavouring to treat customers fairly, they were at different stages in terms of their plan for dealing with the issue.

Gilhooley added: “We certainly support the FCA’s call for more action to deal with the issue – indeed we had been working with a number of lenders in relation to interest-only mortgage repayments long before the FCA issued its paper.

“The Building Societies Association (BSA) has also commented recently on the FCA’s findings and stated their concern that homeowners who don’t have a plan in place are most likely to be the people most reluctant to speak with their lender. Again, we recognise this as an issue and we will continue to work with proactive and responsible lenders looking to reconnect with their customers.

“Lenders simply cannot leave the current situation to develop further and we believe our role in helping to re-open the dialogue between lenders and their borrowers will be crucial in dealing with the issue.”