More than 40,000 borrowers will reach the end of their deal this year and owe an average £104,000, the trade body found.
Around half of these homeowners are over 65.
It is the first of three significant waves of the loans maturing, as estimated by the Financial Conduct Authority (FCA).
Borrowers in this first wave of maturities typically took out the loan in the late 1980s or early 1990s, backed by an endowment policy, ISA or pension.
Strong equity position
Even though these homeowners owe more than £100,000, they have a low current loan to value (LTV), and are therefore in a strong equity position, according to UK Finance.
Almost half have under 25 per cent LTV remaining, and three-quarters have less than 50 per cent.
The borrowers typically have equity of £387,000.
It is expected the vast majority of homeowners will repay the outstanding sum in full on time or within a few months.
The high equity position gives borrowers who cannot repay more options, James Tatch principal, analytics at UK Finance, said in a blog.
But he added: “Of course, the higher risks will lie outside this – among those with higher LTVs and/or lower absolute amounts of equity.
“Understanding the risks and options within the interest-only back book allows mortgage lenders to segment their books and to prioritise and personalise their contact programmes accordingly.”
UK Finance said maturities of the first wave of interest-only loans actually peaked in 2017 and 2018.
And fewer are set to mature this year than initially estimated in 2012, as a result of proactive action taken by lenders.
Tatch said the mortgage industry will continue to work with interest-only customers in 2020 and added the earlier customers talk to their lender the more options they will have.
Dave Miller, client account manager at Spicerhaart Corporate Sales, commented: “Ensuring fair outcomes for customers has to be at the heart of this. The industry has worked hard to make contact with borrowers in this situation but it’s clear that there’s still lots more to do.
“That means redoubling efforts to engage with hard-to-reach customers and having a clear process for helping them find a solution that works best for all parties.”