A survey shows that increasing house prices last spring forced home buyers taking on new mortgages to stretch their finances further than ever.

In April 2006, according to the Council for Mortgage Lenders (CML), homebuyers took out average loans of 3.04 times their income. This was back up to the peak level reached in the Autumn of 2004.

First time-buyers were particularly hard hit with new mortgages for first-timers on average 3.21 times their income. This exceeded the previous record figures set in October 2004.

There are worries that borrowers are stretching themselves too far. However the CML's director general, Michael Coogan, points out that although loans are larger multiples of income, mortgage repayments have actually reduceds a proportion of income since April last year.

He suggested this may be due to the availability of attractive fixed-rate products in the last year.

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