Over a million people have “cause for concern” due to risky lending practices, according to a report by Britain’s financial regulator.

Nearly a third of new mortgages written between April 2005 and September 2007 contained a higher element of risk, the Financial Services Authority (fsa) says.

The fsa pointed to three risk factors among mortgages that it finds worrying: deposits of 10 percent or less, mortgages of longer than 25 years, or mortgages more than 3.5 times the borrower’s annual salary.

Individuals with just one of these risk factors may not be at significant risk, said the report, but where people had two or three of them there was a greater danger.

About 1.04 million people have at least two of these risk factors; 105,000 have all three.

Lyndon Nelson, head of financial strategy and risk at the fsa, pointed to other debt held as the main cause for concern: “It is not necessarily the affordability of the mortgage. It is their other debt. Consumers with other borrowings in addition to the mortgage are struggling, but we are unsighted on their other borrowings.”

Mark Sands, director of personal insolvency at accountants kpmg, agreed:

It is a “drip by drip” problem. An extra £5 on their mortgage, £10 on their council tax bill and so on is really putting the squeeze on people who are financially over-stretched already.These people have a choice—they either stop paying their mortgage, or they stop paying their credit card bills.This is why we are seeing rising levels of both repossessions and personal insolvency.

According to the Daily Mail:

Many homeowners coming to the end of an exisiting fixed rate deal may struggle to find a new home loan.But banks and building societies could now refuse to lend them money, or will charge a crippling rate of interest, because they are seen as a high-risk customer.Before the global credit crunch, lenders were more relaxed about handing out money to anybody who asked for it.The average mortage is now £150,000—more than double the £60,000 level in 1997.But the current squeeze means banks and building societies have become much tougher about the type of loans they are prepared to hand out.More stringent lending criteria means borrowers with small mortgages, or who have borrowed four or five times’ their salary, could struggle to remortgage.

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