The news comes as a study from Spicerhaart Financial Services indicates that uptake of high loan to value mortgages is currently at a record level. According to the company the proportion of consumers borrowing at least 95 per cent of the valuation of their home rose to 19 per cent over the course of last month - the highest level recorded since the survey began. This number was also reported to be up by one percentage point from May and more than twice as much as figures from June 2006.



Operations director Steve Cox said: "We have witnessed a marked growth in high loan to value mortgages this year and there is no doubt that affordability is becoming a problem for the majority of homeowners. Despite clients having to borrow slightly more, however, it is not all doom and gloom. The market is still buoyed by a healthy level of first-time buyers who are confident in their financial security."

Despite the affordability of property being viewed as "a major issue" for both first-time buyers and existing homeowners, the level of those looking to get onto the housing ladder for this first time was reported to have stayed consistent. Overall, the proportion of first-time buyers was said to have stayed at just over a third (37 per cent) as such consumers are "desperate to get onto the housing ladder" that they are "being forced" to take out a higher secured loan.

According to Spicerhaart, the majority of borrowers are looking to secure the level of their monthly repayments by taking out a fixed-rate loan as only nine per cent of consumers opted for a variable rate product during June. Meanwhile, short-term deals - lasting for about two years - were said to be increasingly popular as they accounted for some 60 per cent of all mortgages. The financial company suggested that this indicates an "optimism" that the Bank of England is set to lower interest rates in the near future.

However, following the Bank's decision to increase the base rate to 5.75 per cent last week, Mr Cox advised potential borrowers to be prepared for a rise in their monthly repayments. "The growth in high loan to value mortgages and interest only loans are a warning to borrowers who are overstretching and they should consider what they will lose from their pay packets, which are not increasing at the same pace as house prices and mortgage repayments," he said. The director also signified that loan providers should ensure that borrowers will be able to meet repayment requirements before issuing credit.

Meanwhile, recent moneysupermarket research has showed that 43 per cent of homeowners do not fully research all the mortgage options available when looking to borrow money. Just over a fifth (22 per cent) of consumers were said to consult a mortgage broker for guidance, with about one in five said to have researched several options and providers before taking out a loan.