HOMEOWNERS were today facing further hikes in the cost of their mortgage after the Bank of England raised interest rates for the third time in four months.

The Monetary Policy Committee's decision to put up rates by 0.25% to 4.75% will cost homeowners with an average '65,000 mortgage just over '10 month more.

If lenders pass on the full hike in rates, monthly repayments on a '65,000 loan will increase to '449.09 from '438.88, based on a new rate of 6.75%.

But first-time buyers, who are more likely to have a loan of around '100,000, will see their repayments rise by more than '15 a month to '690.91, while those who are heavily mortgaged with a '200,000 loan will need to find an extra '31.

Homeowners have now seen cumulative rises of '50 a month on a '65,000 mortgage since November last year, while those with a '200,000 mortgage have seen increases of more than '150 a month.

And with analysts expecting rates to end the year at 5%, repayments on a '65,000 loan could increase by '60 a month since rates first began to rise, while someone with a '100,000 mortgage faces paying more than '77 a month extra.

The move also increases fears that increasing numbers of people will struggle to keep up with their debts.

The amount people have borrowed has boomed during the past few years, fuelled by low interest rates and high employment.

The Bank of England released figures last week showing Britons now collectively owe '1.004 trillion through mortgages, loans, hire purchase agreements and credit and store cards.

With interest rates expected to end the year at 5% consumer groups and MPs have expressed concerns that people have taken on unmanageable levels of debt.

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