People taking out home loans are thought to be being overcharged to the tune of £100 million, according to the provisional findings of a new report.

The Competition Commission (CC) has found that a lack of competition in the home credit market means doorstep lenders are charging customers much higher prices for their loans than expected.

CC estimates the extent of overcharging may be as much as £100 million over the last five years which translates to home credit customers paying over £25 too much for an average loan or £9 per every £100 borrowed.

Home credit companies lent about £1.5 billion to 2.3 million people in 2004 and collected £1.9 billion in repayments – earning around £400 million in profits in excess of cost of capital.

"Customers value home credit because it suits their needs very well but the fact is that they are paying too much for it, because of the lack of competitive pressure in the market," said Peter Freeman, Chairman of the CC and of the Inquiry Group.

"We have found that few customers switch between lenders, partly because lenders who already have a relationship with a customer have major advantages over lenders who do not."

The CC, which could impose price caps on firms, plans to discuss the provisional findings of the report with home credit companies before reaching final conclusions later this year.