Buy-to-let borrowers from the West Bromwich Building Society on its tracker mortgages are in line for a refund after the Court of Appeal ruled that the lender was not entitled to increase its interest rate when the Bank of England base rate remained unchanged.
The court allowed an appeal from a High Court decision in January 2015 in favour of the building society.
About 6,000 borrowers are expected to benefit from the ruling, costing the society up to £27.5m.
The case followed the society's decision in September 2013 to increase its interest rate from 1.49% to 3.49% due to "changing market conditions", despite base rate remaining at 0.5%.
Mark Alexander, of the borrowers' action group Property 118, commented: "This ruling sends a clear message to other lenders who have acted in a similar manner, and to those who might have been considering following suit. There are thought to be in the region of 1m tracker buy-to-let mortgages which could have been affected if this case had gone the wrong way."
In a statement, the West Bromwich said: "While we are disappointed, we accept the Court of Appeal’s decision and so will be contacting all affected borrowers, including those who were not part of this action, to advise them of the outcome and that we will be reimbursing them any additional interest charged."