Looming interest-rate rises and a stagnant housing market mean first-time buyers with large mortgages are at risk of becoming “loan prisoners” where in future years they will be trapped paying some of the highest rates, mortgage experts have warned.

The most popular mortgage deals involve fixing rates for just two years. But a cooling housing market coupled with a background of rising borrowing costs could mean that at the end of those deals borrowers will not be able to re-finance to a new, fixed rate. Instead they could be forced to pay their existing lender’s highest “standard variable rate” or SVR, likely to be as much as twice the rate of their starting loan.

Those most at risk are borrowers setting out today with small deposits.