Union Jack flutters in front of the Parliament at Westminster bridge, in London, Britain, January 29, 2022 (Reuters)

The Financial Conduct Authority (FCA) warned that 770,000 households are either at risk of missing mortgage payments over the next two years or are already behind.

Furthermore, the FCA estimated that up to an extra 570,000 mortgage borrowers may face payment shortfalls over the next two years.

The data were disclosed in a Treasury Committee communication published on Wednesday as part of the FCA's response to queries asked during a recent accountability hearing.

According to the letter, there will be about 200,000 controlled mortgages in payment default by the end of June 2022.

The letter also stated that the figure is "subject to changes in interest rates," taking into account market forecasts in September 2022.

According to Nikhil Rathi, the FCA's chief executive, many of these homes are already thousands of pounds behind, with 117,000 borrowers failing to pay a sum equal to more than 1.5 percent of their mortgage total.

The warning will raise further concerns that a flood of forced property sales may drive down house prices in the coming months.

This is happening amid the biggest living standards squeeze on record, as households have been battered by rising interest rates and the sharpest inflation in 41 years.

Rathi stated that the number of defaults will be determined by how many people lost their jobs this year, with the economy anticipated to enter a recession that would persist until at least the end of 2023.

On its account, the Bank of England has also warned that millions of homeowners with fixed-rate mortgages would see their payments climb by £3,000 a year as borrowing costs rise and Threadneedle Street fights to keep inflation under control.

Monthly mortgage payments for more than 800,000 homeowners will triple this year, according to official estimates released this week.

Rathi predicted that some people at risk of default would adjust their spending patterns in order to avoid missing mortgage payments.

The FCA underlined that repossession statistics are now "low". While the most recent numbers have been distorted by a backlog in the courts owing to the epidemic, the FCA said there were 835 repossessions in the three months to June, which Rathi has described as "an incredibly low amount."

According to the Resolution Foundation, a drop in housing values will leave nearly 140,000 young people living in homes worth less than their mortgage.

On its account, the Office for National Statistics showed that an estimated 1.4 million homeowners may need to remortgage this year.