Thousands of UK consumers will still owe a substantial amount on their mortgage when they retire at the end of the decade, a new report has found.

The Independent on Sunday has conducted an analysis of Financial Services Authority (FSA) figures which revealed that, of the 150,000 interest-only mortgages a year that are due to mature over the next eight years, 60,000 are forecast to still be in arrears. 

A significant proportion of this group are due to be approaching retirement age, with 42,000 people aged 60 and over due to hold a mortgage policy with a shortfall by 2020.

Stephen Lowe, Just Retirement’s Director of External Affairs, claimed that many over-60s will look to unlock the value of their property to ensure that they can stay in their home.

He told the newspaper: "There is a horrendous situation developing with tens, if not hundreds of thousands, of people getting to retirement age and being asked to stump up for a mortgage which may not have been sufficiently covered by an endowment investment or even capital growth.

"The options will be stark: work on to repay the debt or find another way to use their home's equity, even resorting to selling up."

However, elderly UK consumers will struggle to extend the duration of their interest-only mortgage as many providers are becoming increasingly reluctant to offer these deals.

Furthermore, those approaching retirement are unlikely to find other means by which to pay off their mortgage as their chances of securing or remaining in full-time employment fall and their poor-performing endowment policies offer little returns.

Many could also be in negative equity due to falling house prices coupled with the likelihood that they increased their borrowing at the height of the housing boom.

"The mortgage industry has to wake up to this issue." Stephen Lowe added.