Britain is on the brink of its own sub-prime mortgage crisis, with almost a quarter of a million of the most vulnerable homeowners facing soaring repayments and the threat of repossession.

Mortgage experts said that despite yesterday’s £10 billion injection into the market by the Bank of England, rates for an estimated 230,000 to 300,000 sub-prime borrowers will soar to unaffordable levels of more than 10 per cent when they reach the end of their current deal.

Strict new borrowing rules will prevent homeowners with the poorest credit histories from remortgaging because lenders may refuse to offer them a new deal when they come to the end of their current rate, leaving them stranded on expensive variable rates and adding hundreds of pounds to their monthly mortgage bills.

Industry commentators said yesterday that this could force many to sell or face repossession, replaying the recent US sub-prime mortgage market collapse that prompted turmoil in global financial markets.

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Some of Britain’s best known sub-prime lenders, including GMAC-RFC and Kensington Mortgages, have announced higher rates and tougher criteria that would leave many existing borrowers, who benefited from more relaxed lending practices before the summer, ineligible for a loan.

Before August, a “heavy-adverse” borrower, with a history of county court judgments, arrears and possibly bankruptcy, could get a rate of about 8 per cent. The same borrower would now struggle to get a mortgage at all, brokers said. They face rates as high as 10.85 per cent, which could rise further, as they are linked to movements in the inter-bank lending rate.

A borrower taking out a £100,000 loan at 7.84 per cent with Kensington Mortgages six months ago is repaying £761 a month. At the end of the two-year fix, repayments would rise to £930 a month on a variable rate of 10.3 per cent, pegged at 2.50 points above Kensington’s variable rate.

Ray Boulger, of John Charcol, the broker, said: “Some won’t be able to get a mortgage, others won’t be able to afford their existing one. For some, the situation will be a bit like the US crisis, although that was clearly much worse.” As with Northern Rock, a reliance among sub-prime lenders on the wholesale markets for mortgage funding has left many exposed to the fallout from the US crisis, forcing them to cut exposure to the riskier end of their customer base to survive.

Victoria Mortgages, a specialist sub-prime lender, went bust in the summer after it failed to secure enough funding to keep lending. From next Monday, Kensington Mortgages will reduce the amount it will lend to 75 per cent of the property’s value.

Lenders said that the £10 billion emergency injection would not be enough to prevent borrowers on the most extreme sub-prime deals feeling the effects. Alan Cleary, managing director of Edeus, the specialist sub-prime mortgage lender, said: “The £10 billion on offer is quite clearly not enough to make a difference to borrowers who face the prospect of not being able to get loans.We are choosing to do a lot less volume next year because we are assuming the sub-prime market will not get better. This is all about surviving.”

Debt charities blamed irresponsible lending by banks to sub-prime borrowers before the credit crunch for leaving them exposed. Chris Tapp, deputy director of Credit Action, the debt counselling service, said: “This problem stems from years of overly liberal lending. When the going was good, everyone lent too freely without thinking ahead.”

Sub-prime loans account for around 9 per cent of the mortgage market, or just under one million loans, according to estimates. “Heavy adverse” borrowing is estimated to represent about a quarter of this market.