More than 750,000 households are at risk of defaulting on their mortgages over the next two years.
Soaring borrowing costs could make payments unaffordable, Britain's financial regulator has warned.
The Financial Conduct Authority (FCA) said that over 200,000 households had already fallen behind on payments by the end of June 2022.
Nikhil Rathi, the FCA's chief executive, has suggested many of these households are already thousands of pounds behind.
The watchdog said a further 570,000 households were “at risk of payment shortfall” within the next two years.
The Telegraph says the warning, issued in a letter to MPs on the Treasury Select Committee, will trigger fresh fears that a wave of forced property sales could bring down house prices in the coming months.
It comes amid the biggest living standards squeeze on record after households were battered by rising interest rates and the highest inflation for 41 years.
Recession
Mr Rathi said the number of defaults depended on how many people lose their jobs this year, with the economy expected to enter a recession lasting at least until the end of 2023.
The Bank of England has warned that millions of homeowners on fixed-rate mortgages face an average payment increase of £3,000 a year as borrowing costs rise and it battles to keep a lid on inflation.
Official figures this week showed that monthly mortgage payments will triple for more than 800,000 households this year.
Mr Rathi expected some people at risk of default to change their spending habits so they avoid missing mortgage payments.
He said: "Some people will be able to reduce their spending or make use of savings to help them meet their mortgage commitments."
He also noted that the FCA's default assumptions were based on interest-rate expectations on September 23 - the day of former chancellor Kwasi Kwarteng's ill-fated mini-Budget.
Interest rate
At the time the interest rate was expected to peak at 5.5%.
An improvement on the markets means that the Bank of England's base rate, which is used as a reference point by high-street lenders to set thousands of mortgage rates, is now expected to go no higher than 4.5%.
This suggests the number of actual defaults could be much lower.
The FCA highlighted that repossession numbers are currently "low".
Mr Rathi has previously warned that young borrowers aged under 30 were "particularly at risk" of default.
These first-time buyers had "quite often stretched themselves to purchase a property", he said, adding: "They may have got a fixed-rate mortgage at 2% or 2.5%. When that expires, they may be looking at a materially higher rate of 5% or more."
The Resolution Foundation think tank has warned that a slump in house prices would leave almost 140,000 young people living in a property worth less than their mortgage.