There are almost 50,000 "mortgage prisoners" stuck on expensive home loans they can't afford to leave, the financial regulator has revealed.
'Mortgage prisoners' took out home loans in the days of easy credit before the financial crash of 2007.
Afterwards, the financial regulator brought in tougher financial hurdles to taking out a mortgage.
These backfired on many existing homeowners, who found they could not meet the new rules and remortgage when their deals ended.
This left them stuck paying inflated payments on their lenders' standard variable rates - which kick in after a mortgage term ends.
Some fear their homes will be repossessed as they are paying rates of 6-7 per cent, two to three the typical amount for a mortgage currently - though some are available for less than 1 per cent.
The average mortgage prisoner pays 4.3%, the Financial Conduct Authority (FCA) found.
Today the FCA published a report into the mortgage prisoner problem.
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Government had asked the FCA to carry out this report so it had data to help it fix the problem.
The FCA said there are 195,000 borrowers who are mortgage prisoners.
Around 66,000 of these may be able to switch because some lenders might take them, and the FCA advised them to talk to a mortgage broker.
Another 30,000 can't switch, but are on low mortgage rates so would not benefit from switching anyway.
The FCA said: "They are up to date with payments but can’t switch because of their loan and/or borrower characteristics. However, the interest rate they’re on means they’d be unlikely to save money from switching- so they aren’t mortgage prisoners."
But there are 47,000 mortgage prisoners who cannot switch and who are losing out on their current deal, the FCA said.
Only a "small number" of mortgage prisoners have managed to get off these expensive deals, the regulator found.
It now wants lenders to relax their normal lending rules to help mortgage prisoners shift away if they want to.
Other mortgage prisoners may be able to improve their situation by speaking to consumer organisations or debt advice charities.
Many mortgage rates, including lender SVRs, could rise if the Bank of England raises base rate this year .
Base rate is factored in to the cost of many mortgage deals, but could rise this year as the Bank tries to get a grip on rising inflation .
Quilter Financial Planning managing director Gemma Harle said: "For some time now inflation has been increasing and it is heavily touted that at the next Monetary Policy Committee meeting the Bank of England would announce an interest rate hike.
"While the emergence of the new Omicron variant might mean that this decision is pushed back, at some point in the not-too-distant future rates are likely to increase.
"When they do, mortgage prisoners are often the borrowers hit hardest as they have no means of moving to cheaper mortgage deals and have to stick with their inactive lender’s standard variable rate leaving them with no control of potentially spiralling mortgage repayment costs."
Lender SVRs are always higher than their advertised rate for new mortgages.
Earlier this year a proposed cap on SVRs was put into legislation called the Financial Services Bill by the House of Lords.
This would have limited how much mortgage prisoners paid, but was voted down in the House of Commons.
