LONDON (AP) _ Prime Minister Margaret Thatcher's program to transform Britain into ''a property-owning democracy'' has produced an army of new homeowners. But many are being squeezed by her determination to curb inflation by driving up interest rates.

Mortgage costs have risen at their fastest rate in 50 years, to 13.5 percent from 9.75 percent last summer, confronting many of Britain's 15 million homeowners with heavy debt and even the risk of losing their homes, homebuyers' advocates say.

Types of mortgages in the United States vary but their rates generally hover around 10 to 10.5 percent.

Stephanie Manasche, a single mother in Harrow, says her monthly payments have jumped 42 pounds ($73.50) to 262 pounds ($458.50), and she had to negotiate a temporary agreement with her lender to pay interest only. That brought the payment down to 253 pounds ($443), and she is still having trouble keeping up.

''It makes me feel very, very frightened, obviously,'' she said.

The crunch could also make Britons lose confidence in real estate and return to renting, undermining Mrs. Thatcher's initial aims.

''The present government is pulling the rug out from underneath their feet,'' said Michael Brett, secretary general of the National Association of Homeowners in Shrewsbury.

John Doling, a professor at the University of Birmingham's department of social policy, said: ''Many people will be deeply depressed, deeply suffering from what has happened.'' Some, he says, ''will have to economize on food and they won't eat properly.''

But lenders say defaults are more an outcome of unemployment and marital break-up than of higher interest rates.

They stress their eagerness to help borrowers in difficulty by, for example, extending the term of a mortgage.

''As long as those people come in and let us know, there are things we can do,'' said Mark Hemingway, a spokesman for the Halifax Building Society, the country's biggest mortgage lender.

The monthly payment on a new 40,000-pound ($70,000) 25-year adjustable mortgage has risen to 388.42 pounds ($679.74) from about 304.93 pounds ($533.63) last summer, the Building Societies Association said.

Repayments on only the first 30,000 pounds ($52,000) of a mortgage are tax- deductible. Most rates fluctuate with interest rates. Fixed rates are rarely offered, and 40 percent of mortgage-holders have their monthly payment adjusted once a year.

The squeeze worsened last year when young buyers rushed into the market and overcommitted themselves trying to beat the abolition in August of double tax relief for unmarried joint mortgage-holders.

''When people see prices going up rapidly they feel they have to be active in the housing market right now before it is too late,'' Doling said.

In June Mrs. Thatcher's Conservative government began raising interest rates, stalling the housing boom so that buyers who came in at the top of the market can't get out at a profit.

Mrs. Thatcher has promoted home ownership as part of her campaign to roll back socialism, allowing occupants of rented public housing to buy the property at preferential terms.

Sixty-four percent of Britain's housing is occupant-owned, compared with 55 percent in 1978, the Building Societies Association said.

But now Mrs. Thatcher says that inflation, which has jumped to an annual rate of 6.8 percent from 3.3 percent a year ago, is her top priority, and interest rates are her weapon.

''I think many people would find the irony in that,'' Doling said.

Brett, of the homeowners association, said: ''We are predicting a massive rise in the number of mortgage arrears and repossession.''

In 1985, when mortgage rates went up to 14 percent, mortgage arrears doubled, Brett said.

Today some 300,000 people are in arrears, while last year, 25,000 families saw their homes repossessed, Brett said.

In addition, he said: ''As soon as someone falls behind in mortgage payments, even if they don't get repossessed, they will get a bad reputation financially and will in fact be blighted for life.''

The building societies association said up-to-date statistics aren't available yet, and it expects arrears and repossession to show a decline because unemployment is down.

A 36-year-old bank employee from Liverpool who requested anonymity said: ''A couple of years ago, the mortgage was affordable. Now it is ridiculous.''

Sarah Rudman, a 19-year-old advertising saleswoman, bought her Shrewsbury home in September with fiance Stephen Chaloner, a 23-year-old software engineer. Payments on their 21,000-pound ($36,750) mortgage have risen 57 pounds ($100), to 220 pounds ($385) a month.

Now, Ms. Rudman said, they have to postpone the wedding and lower their living standard.

''We were advised by a lot of people, 'You ought to have your own house. Buy now.' We panicked relly. We just grabbed it,'' she said.