MORTGAGE hunters with poor credit records look set to feel the squeeze of higher interest rates as a result of the global credit crunch.

Would-be homeowners are being confronted with hikes equating to around £150 a month on a £100,000 loan as a result of specialist lenders adding up to 2.5% to their rates.

Meanwhile, other firms are tightening up their lending criteria, making it harder for some people to qualify for a mortgage.

The moves follow a global credit crunch and the worldwide crash in stock markets last week.

The uncertainty following the crash has made it harder for banks to finance mortgages, and the US sub-prime market, where people not eligible for mainstream loans can get mortgages, has been cited as the cause of many of the markets' problems.

UK sub-prime specialists are finding it increasingly difficult to attract investors to help finance their mortgage book, especially at the heavy adverse end of the market, aimed at those with a poor credit repayment history.

The higher cost of lending for banks is beginning to have the inevitable knock-on effect on the customer.

Some lenders have raised their rates, while others are beginning to refuse to lend to people in "riskier" categories.

Kensington Mortgages, a pioneer of the sub-prime market in the UK, will raise its rates by 0.55% this week.

Alex Hammond, spokesman for the firm, admitted: "The increase will mean that loans are pushed out of the affordability of some customers."

Victoria Mortgages, another sub-prime specialist, has increased rates by 2.5%.

But following the crisis in the US sub-prime sector, caused by home-buyers defaulting on loans that some say should never have been agreed in the first place, market-watchers have been wary of getting their fingers burnt.

This has led to tougher market conditions for the sub-prime sector.

Some lenders have decided to rein in their lending criteria, making it harder for people to qualify for a loan, while others have simply ditched their range.

Last week, db mortgages, a subsidiary of Deutsche Bank, announced it will no longer accept first-time buyers.

The new rates and criteria changes will make it harder for overstretched house-hunters with a poor credit score to find a lender.

Ray Boulger, senior technical manager at broker John Charcol, said: "At the margins it means that there will be a few people who will struggle to get a mortgage and the wider picture is that everyone in the sub-prime market will pay more."