HOMEOWNERS have seen the cost of their mortgages rise by 12 per cent during the past year after hikes in the cost of borrowing, new figures show.

Single homeowners spent an average of 42 per cent of take-home pay on their mortgage during the second quarter of the year, according to Cheltenham & Gloucester.

This was up from 37.5 per cent the previous year, and was the highest level since 1992.

People who bought a property with two incomes saw a similar increase in the amount they spent on their mortgage, with repayments accounting for £21.57 out of every £100 of take-home pay.

This compares with £19.23 during the same period of 2003.

The situation was worse for first-time buyers, who are now spending an average of 22 per cent more on their mortgage than they were a year ago.

Single people who have taken their first step on to the property ladder see nearly 36 per cent of their post-tax income go on repayments, while people buying a property jointly are spending 18 per cent of their pay on their mortgage.

Cheltenham & Gloucester managing director Jon Pain said: "Even the more cautious forecasts are pointing towards affordability levels not seen since the early 1990s crash, although it should be noted that they are comfortably below the peaks of the last boom."

Without the same "extreme bubble-type environment" seen from mid-1988 to 1990, there was a far lower likelihood of the same dramatic collapse in the housing market, Mr Pain pointed out.

And he added: "At current prices and income levels, interest rates would have to be four to five per cent higher than current levels to reach the same critical point."

First published: Sept 23