The Financial Services Authority claims there are almost one million mortgages giving it "cause for concern" due to their riskier lending characteristics.

The City watchdog said more than 30% of new mortgages issued between the second quarter of 2005 and the third quarter of last year contained a higher element of risk.

These include people being given a larger mortgage than normal compared with their annual earnings, and deals advanced for higher loan-to-value ratios.

It also found a rise in mortgages taken out for longer than the typical 25-year period, or for higher than normal amounts.

The regulator said these in isolation are not necessarily a problem as they do not present an excessive risk to consumers, but it claims there could be problems for homeowners who come in two or more of these categories.

Some 840,000 mortgages taken out during the period had at least two of these characteristics, with 150,000 having three.

The FSA believes these 150,000 borrowers face the highest risks in terms of affordability, and warned that they are the most likely to default on their home loans.

Lyndon Nelson, the FSA's head of financial strategy and risk, said: "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."

The FSA also revealed that interest rates on mortgages may increase, putting further pressure on finances.

The watchdog said that mortgage repayments in 2005 totalled around 24% of take-home pay, but for people on variable rate deals this has jumped to as much as 29%, while a 1% rise in interest rates will push this over 30%.

About 1.4 million people are expected to come off short-term fixed-rate mortgages this year and are probably going to be hit by a £210 a month hike in repayments if they choose a standard variable rate, it added.

And the FSA warned that even though the rate of repossessions remains relatively low, there is evidence that the shift in lending has caused a sharp rise in mortgage defaults since 2003.

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