Since 2015, these figures have halved, predominantly as a result of borrowers transitioning to repayment loans or settling their debts sooner than anticipated.

A pattern emerges in the data – a high concentration of these mortgages will reach maturity in 2031 (72,000) and 2032 (77,000), with another significant peak in 2027.

This timeline provides ample opportunity for borrowers to deliberate over their repayment strategies and potentially address any outstanding capital before their mortgages conclude.

The FCA’s commissioned consumer research revealed that a significant 78% of borrowers were informed about the importance of a repayment strategy at the commencement of their mortgage. While 82% of them exuded confidence in meeting the repayment deadline for the outstanding capital, this optimism might be slightly misplaced. While only 36% foresee a potential shortfall, FCA projections estimate this figure closer to 46%.

David Geale, director of retail banking at the FCA, said: “Whilst it is encouraging to see the number of interest-only mortgages reducing faster than expected, with the majority of loans being paid off or transferred to other products, the challenge remains for a significant number of borrowers.

“Taking an interest-only mortgage can mean lower monthly payments, but borrowers need a plan to repay the outstanding balance when the mortgage comes to an end. If you have an interest-only mortgage and are unsure if your current plan is sufficient, speak to your lender as soon as possible, to discuss your options.”

In a bid to support these borrowers further, the FCA is slated to collaborate with both industry and consumer groups to deliberate on the research findings. Over the last ten years, the FCA has been proactive in ensuring the fair treatment of interest-only borrowers.

This includes the introduction of new rules and guidance, and a review in 2018 centred on the fair treatment of this group. In line with the recently enacted consumer duty, the FCA plans to revisit and refine its guidelines to align with the duty’s elevated standards, urging firms to reassess how they can best support their clientele.