Disgruntled homeowners are suing banks for millions of pounds over what they termed as “unfair” mortgages.

According to reports, a recent change in the law will now allow homeowners who took out the 1990s Shared Appreciation Mortgages to claim money from HBOS and Barclays.

Large quantities of Sams were sold to homeowners in 1997 and 1998, either on a zero interest or fixed interest basis. Following the recent changes in the Consumer Credit Act 1974 a group lawsuit is reportedly being prepared by Hilary Messer, head of litigation at RWP Solicitors in Reading.

Ms Messer said: “The previous provisions in the Consumer Credit Act 1974 applied in relation to ‘extortionate credit bargains’. They were seldom invoked and rarely successfully because the courts applied the provisions in a restrictive manner.

Sams taken on a zero interest meant that when homeowner comes to sell, the banks would typically receive up to 75% of the appreciation in value of the home over the past ten years. Banks also received repayment of the original loan in full, in exchange for having lent only up to 25% of the value of the home ten years ago.

As a result, thousands of homeowners are forced to continue living in properties that when sold will not realise sufficient value for them to purchase a suitable replacement home.