Mortgage lenders have come under attack from leading consumer and debt counselling groups for putting thousands of cash-strapped first-time buyers at risk of serious debt problems by lending them too much money.

The criticisms came as new figures showed that the size of home loans in relation to the incomes of aspiring homeowners has reached record levels. The Council of Mortgage Lenders (CML) says the average first time buyer now receives a mortgage worth 3.21 times their salary, up from 2.4 times income five years ago.

A slew of new deals promising aspiring homeowners up to seven times income were blamed for making debt seem more acceptable at a time when householders are already becoming increasingly overstretched. Millions of homeowners are already facing sharp increases to their monthly outgoings in the wake of last week’s quarter point Bank of England base rate rise and soaring energy bills.

Keith Tondeur, managing director of Credit Action, a debt advice service, said: "It is hugely frightening that lenders are prepared to offer such high sums. They are building up a housing market bubble, but if the bubble bursts, millions of first-time buyers will be in trouble."

Last week, Morgan Stanley launched a deal aimed at first-time buyers through Advantage, its new mortgage arm, that will lend up to seven times a borrower’s income, in exchange for a share of the profits when the property is sold. Scottish Widows bank yesterday announced that it will now lend graduates a maximum of five times their income and up to 102 per cent of the value of the property, effectively putting borrowers into negative equity.

Mike Naylor, principle researcher at Which, the consumers association, said: "Not only are people prepared to borrow more, banks and building societies are also prepared to lend more, and not always responsibly. The more that big debts become acceptable, the greater the risk to borrowers if interest rates continue to rise, if house prices fall, and if unemployment goes up further."

Sue Edwards, senior social policy officer, for Citizens Advice, said: "We are already dealing with well over a million new debt problems a year, and are beginning to see more people with mortgage arrears facing the threat of repossession. Some people are extremely vulnerable to even a slight change in their circumstances, so higher energy costs and the increase in interest rates could be enough to tip the balance if people are mortgaged up to the hilt."

Banks and building societies have come under increasing pressure over recent months to help first-time buyers faced with rising house prices to get onto the ladder. Many have switched from offering mortgages based on a buyer’s income to calculating how much they can afford to repay once other credit commitments have been taken into account, which usually results in higher loans.

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