New research from the economic and social research consultancy Polici suggests that one in five homeowners could become mortgage prisoners if new lending rules are introduced.
If the Financial Services Authority presses ahead with tough affordability rules, around 19% of current borrowers would be prevented from moving or remortgaging. A further 30% of people would see a reduction in the amount.
The Group estimates that within the first year of the rules being introduced, around 483,000 homeowners looking to move and renters wanting to buy a property would be affected, with 150,000 people shut out entirely.
According to the independent report that was funded by the Council of Mortgage Lenders (CML), a further 380,000 people who hoped to remortgage during the 12 months would also be unable to do so.
Overall, the proposals had the potential to impact 5.6 million homeowners, around half of the total. Self-employed, older workers, first-time buyers and people on low incomes would be hit hardest by the changes.
The FSA is proposing banning self-certification mortgages and introducing tough affordability and income verification checks that lenders would have to carry out under its Mortgage Market Review.
Lenders would also have to take into account future interest rate rises when assessing whether borrowers could afford their loan.
A second report by research consultancy Oxera, also funded by the CML, warned that the cost to lenders of the changes was likely to be significantly higher than previously thought.
It said the annual cost to the industry of having to verify borrowers' income was likely to be between £7.1 million and £10.3 million, well up on the previous estimate it had made in a report for the FSA of between £2.3 million and £7.2 million.
It added that assessing borrowers expenditure and the affordability of a mortgage was likely to cost a further £3.5 million to £13 million a year.
These costs are the equivalent of £21.50 for every mortgage taken out, rising to £35 per mortgage for people whose income needed further investigation.
The Council of Mortgage Lenders urged the FSA to re-consult on the draft rules for responsible lending, carrying out a full impact analysis.