As many as a third of residential mortgage holders find themselves effectively stuck in their homes as a combination of poor equity and economic conditions restricts lending.
In total, approximately 3.5 million households in the UK are affected, according to mortgage broker, John Charcol.
The large number is made up by two million either in negative equity of equity of less than ten per cent, 500,000 with just 10 to 15 per cent equity in their home and a further one million who have either sub prime or self certified mortgages.
Homeowners who find themselves in this position will find it very difficult to move as there are so few mortgage deals available to people with less than 15 per cent equity.
Even if a deal can be found, it is likely to have a very high interest rate and applicants will face a strong possibility of being rejected as lenders insist on a high credit score.
"Having such a large number of households who are currently unable to move is not only a serious problem for the people concerned, but also has important macro economic consequences," said Ray Boulger of John Charcol.
Mr. Boulger also hit out at the Treasury Select Committee's 'Mortgage Arrears and Access to Mortgage Finance' report, which was released last week.
"Evidence from Lord Myners, Financial Services Secretary, demonstrated his complete failure to understand the current state of the market by his comment that there is a very competitive market for mortgages.
"It's extremely worrying that someone who is helping shape government policy has such a dangerously naïve understanding of current conditions."
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