Thousands of first-time buyers have been hit hard by the recent 0.25 per cent increase in the Bank of England base rate, online mortgage firm mform.co.uk has warned.

Its findings show that 2 million homeowners aged between 18 and 34 claim that they will now struggle with their mortgage repayments.

This will rise to 2.66 million if there is another 0.25 per cent increase in the Bank of England base rate, mform.co.uk said.

Eamonn Rice, mform.co.uk chief executive, said: "There have been four increases in the Bank of England base rate in the past 12 months and this has hit many homeowners hard.

Eamonn Rice, mform.co.uk: "There have been four increases in the Bank of England base rate in the past 12 months and this has hit many homeowners hard."

"In particular, many first-time buyers either use all or most of their savings for a deposit or take out 100 per cent mortgages, and have loans that are a huge multiple of their income.

"In a period of rising rates, it is now especially important to shop around for a competitive mortgage."

Analysis of data from the Council of Mortgage Lenders (CML) by mform.co.uk reveals between 2005 and 2006, the average mortgage taken out by a first-time buyer increased by 11.72 per cent, but their income only rose by 9 per cent.

Similarly, in March 2007, the average mortgage taken out by a first-time buyer was 9.96 per cent higher than the same period last year, but their income only increased by 5.89 per cent.

Data issued by the CML revealed that first-time buyers in March spent on average 18.3 per cent of their income on mortgage interest repayments, compared with 18 per cent in February and 16 per cent in the same period last year.

The survey also revealed that first-time buyer income multiples were 3.31 of their average income compared to 3.15 in the same period in 2006.

UK interest rates currently stand at 5.5 per cent.

The article Rate rises hit first-time buyers hard originally appeared on 999 Today