A "tsunami" of homeowners face falling behind on their mortgage repayments as soon as interest rates begin to rise, a leading banker has warned.
Richard Banks, the chief executive of UK Asset Resolution (Ukar), believes a "scary" number of families face being repossessed unless lenders prepare for higher rates.
In an interview with the Guardian, Mr Banks, whose organisation was set up to run the nationalised mortgages of Bradford & Bingley and parts of Northern Rock following the banking crisis, also said mortgage providers had been too lenient with some customers, forcing them further into debt.
The chief executive said 23,000 of Ukar's 750,000 mortgage holders are more than six months behind with payments and warned the number could rocket when rates rise.
"You can see if you don't do something about it, you can see a tsunami," he said.
"If you don't get into the hills you could get drowned by this. If you don't manage this properly it could get very messy."
The Bank of England interest rate has remained at 0.5% for more than two years.
However, international bank regulator The Bank of International Settlements, has warned officials that it needs to rise to control inflation.
Mr Banks said his concern about a rise in repossessions was industry-wide and was is partly due to the its "knee-jerk" reaction at the beginning of the 2008 crisis.
He said that the Labour Government's plea to lenders to help customers stay in homes by means such as lowering monthly interest payments had led some to be too lenient.
He said: "We as an industry, as a kneejerk reaction in the emergence of the crisis, and because the government asked us to be forbearing to customers in the hope it would all go away, we have been too lenient with some customers."
Mr Banks said a "a tough love approach" was needed to combat the potential problem.
"It's treating customers fairly, not nicely, because if you can't afford your mortgage you are only increasing your indebtedness," he said.
"If we allow you to increase your indebtedness, that's not really fair to you."
Ukar runs the £80bn of nationalised mortgages and is the country's fifth largest mortgage lender.
The firm has begun cold-calling customers it believes are at risk of falling behind on payments in an attempt to keep their mortgage payments on schedule.
It is also targeting customers more than six months behind their payments and at risk of repossession.Reuse content