German banks could soon be counting the cost of a court decision to allow people to annul mortgages they have bought on the doorstep from roving salesmen.

The decision on Tuesday came from Germany's highest civil court, the Federal Court in Karlsruhe. Only the Constitutional Court, which rules on whether laws are in line with the constitution, ranks higher.

The Federal Court was considering the implications of a ruling by the European Court of Justice in December, that people sold mortgages at the door were allowed to withdraw from the deals.

The ECB did not put a time limit on its ruling, and the Federal Court said its interpretation was that people could pull out "even years later".

The practice was widespread in former East Germany in the first few years after reunification in 1990.

German law already allows consumers to back out of unsolicited sales agreements signed at the front door.

But consumer groups were taking banks to court to claim that the exception was unjust.

Shares hit

One of the banks named in the suit, HVB - whose exposure to the deals is greater than most of its peers at about 13bn euros ($11.4bn; �8bn) - saw its shares fall as much as 3.7% on the news.

"The court is heading towards serious constitutional questions," the bank's lawyer, Achim Kraemer, said during the hearing.

But observers believed the bank, Germany's second biggest, could face a nasty problem thanks to the ruling.

"It's a potentially serious issue which could hang over it for a long time," said Piers Brown, analyst at Commerzbank Securities in London.

"Much depends on how many people actually decide to push HVB on this."

If many people took up the offer, HVB and other banks could be forced to return the interest borrowers have paid on their home loans - without getting back the collateral, the property itself.