The stock market's strong recovery last year has made only a marginal impact on the number of home-buyers whose endowment policies can no longer be expected to pay off their mortgages in full.

Norwich Union, Britain's biggest life company, reported yesterday that its main with-profits fund achieved a total return of 17.7 per cent before tax last year.

Most final bonus rates have been increased. All its regular bonuses added to the guaranteed value of policies were either held or raised.

Despite that, 72 per cent of the letters sent last year to its one million holders of mortgage endowments were "red" - indicating that the value of the policies would have to grow by more than eight per cent a year to pay off their mortgages as intended.

That was down from 86 per cent in 2004, said John Lister, NU's chief actuary.

Another 21 per cent, down from ten per cent, were "amber", needing investment returns of six to eight per cent.

The remainder were "green" indicating the value of the policies needs to grow by less than six per cent a year to clear the mortgage. That compares with only four per cent in 2004.

Many, but not all, of these home-buyers are covered by a promise given by NU in 1999 undertaking to make good any amount by which their policies might fall short of future growth of six per cent.

NU stood by this promise through the stock market collapse that began in 2000 and earmarked £1 billion to meet the cost.

Yesterday it confirmed: "Norwich Union believes that its mortgage endowment promise remains fully viable under the current and improving market conditions and as a result is not under review. If market conditions were to change significantly in the future then the promise may be reviewed.

"Norwich Union has committed to its customers that if it was to review the promise, that it will give policyholders at least three years' notice of any proposed change."

Mr Lister said this caveat referred to an "Armageddon situation, if the funds get into difficulty".

But he pointed out that it was never a promise to clear every mortgage as originally intended. Where investment returns of more than six per cent are needed to achieve that, home-buyers will still have to make good the difference,

Most of the endowments heading for a shortfall were taken out during the 1990s, he added.

Twenty-five year policies taken out in 1981 and maturing now are still meeting their original target values comfortably. A man who took out a typical 25-year endowment costing £50 a month on January 1, 1981, with a target of £30,368 is now receiving a payout of £50,295 - leaving him with £19,927 clear cash.