First-time buyers could be hardest hit after two major lenders decided to limit mortgages in high-price areas of the South-East.

Restrictions are being introduced in Brighton and Hove and certain other areas.

Property prices in Brighton have shot up in recent years and NatWest and Alliance & Leicester fear they could be left with bad debts if there is a sudden downturn.

Both lenders are cutting the amount that can be borrowed to 90 per cent of the total property cost for some homes.

mortgage experts are worried that if the trend continues it could seriously hit first-time buyers, many of whom rely on 100 per cent mortgages or greater in the Brighton area.

Wayne Gibbs, branch director of mortgage advisor Charcol, at Queens Road, Brighton, said: "Salaries in Brighton are traditionally lower than in other parts of East and West Sussex.

"We tend to find that first-time buyers looking here are needing more of an income stretch. They tend to want to borrow 95 per cent or above.

"These are the people who are going to be hardest hit if what NatWest and Alliance & Leicester are saying comes true."

But Mr Gibbs added there were more lenders than ever willing to offer 100 per cent mortgages and some even offering up to 125 per cent of a property's cost.

He also said most lenders tended to follow the lead of the UK's largest mortgage lender The Halifax, which was opposed to the action taken by NatWest and Alliance & Leicester.

Peter Brown, a spokesman for Alliance & Leicester, said the firm was not picking on Brighton in particular as the policy affects all homes costing over £100,000 in the South-East.

He said: "We are a prudent lender anyway and do not lend above 95 per cent.

"Post-September 11, in London and the South-East where prices have risen above the national average, we thought it was prudent to have a policy that for any properties over £100,000 the loan-to-value would be 90 per cent."

Properties costing under £100,000 would still be eligible for 95 per cent mortgages but the average price for a flat in Brighton or Hove is now over £100,000.

A spokeswoman for NatWest said mortgages are dealt with on a case-by-case basis but the blanket 90 per cent limit has currently only been introduced in certain parts of Greater London.