More than a million homeowners could be at risk of serious financial difficulty and possibly losing their homes in an economic slowdown, the City regulator warned yesterday.

The warning comes as surveyors predict today that 123 homes a day will be repossessed this year. The FSA cites three warning signs on mortgages:

· The loan was taken out for longer than 25 years;

· It is worth more than 90% of the home;

· The amount borrowed is 3.5 times or greater than income.

Over a third of all mortgages sold between April 2005 and September 2007 fall into one or more of these categories. This suggests that more than 2m of the 5.7m mortgages written during this period are of potential concern.

It is the 1.04m customers whose mortgages contain two or more characteristics who most concern the FSA. It calculates that the number "most likely to default on loans" - those whose mortgage falls into all three categories - is 150,000.

The regulator is concerned that many borrowers are badly prepared for worsening economic conditions. It believes homeowners may have become too reliant on cheap credit and rising house prices to sustain levels of spending.

The FSA's concerns are based on the current economic climate deteriorating and an end to the easy credit available to many customers over the past two years.

A "significant minority" of customers could find their finances become very tight if lenders react to any worsening in financial conditions by cutting the number of mortgages they are prepared to sell .

Read: Warning over one million homes at risk | Money | The Guardian

Judging by what has happened in the US, repossessions are the order of the day and the lenders don't appear to be taking any resonsibility for contribution to bad lending and in other cases, illegal lending.

My advise would be to do the calculations using interest rate rise % to anticipate what you think the increased cost will be and get legal advice asap because repossessions will be a given if you default and if the 80's and the US housing economy/market is anything to go by.