More lenders have pushed up their mortgage rates ahead of the Bank of England’s interest rate decision on Thursday.
Santander and Halifax have both hiked prices across their fixed rate deals.
A significant number of Santander’s mortgages are being increased by 0.15 percentage points but some are being priced up by 0.19 percentage points.
Halifax has also upped rates. Rates for home movers and first-time buyers have risen by 0.15 percentage points while its remortgage deals are up 0.2 percentage points.
Renewed tension between the US and Iran has led to fears of higher inflation, which has prompted lenders to raise prices.
The Bank of England will decide whether to increase the base rate on Thursday, in a move that could influence how banks price their mortgages.
Santander followed hot on the heels of the Halifax in announcing it is increasing rates
It is widely expected to hold interest rates at 3.75 per cent.
It has maintained this stance throughout the year amid fears that inflation could spike thanks to the pressure on oil and gas prices arising from the Middle East conflict.
Higher interest rates increase the cost of borrowing for households and incentivise saving. This usually reduces spending and keeps inflation down.
Sonia swap rates, the inter-bank lending rate on which banks base the price of their fixed mortgages, remain above 4 per cent. Five-year swaps hit 4.23 per cent yesterday, up from 3.97 per cent a month ago.
The average two-year fixed rate today is 5.62 per cent according to rates scrutineer Moneyfacts, while the average five-year rate is 5.64 per cent.
The cheapest rates, available to those with the largest deposits and good credit ratings, are around 4.5 per cent.
Just two weeks ago, the cheapest two-year fix for a home buyer was 4.19 per cent and the lowest five-year fix was 4.31 per cent.
Anthony McQuilliam, director at Essex-based Bolt Mortgages, said: ‘The two biggest high street lenders repricing on the same day tells borrowers everything they need to know about where the market is heading in the short term.
‘If a mortgage renewal or purchase is on the horizon in the next six months, a conversation with a broker needs to happen today, not next week.’
Emma Jones of specialist broker When the Bank Says No, suggests that rates are unlikely to see a sustained fall until the conflict in the Middle East ends.
‘Amid ongoing tensions in the Middle East, the price of oil has been on the rise again and that risks feeding inflation, which could see interest rates rise or at least stay higher for longer,’ she said.
‘Markets and lenders are increasingly nervous about inflation and that is now starting to really hit borrowers here in the UK with higher mortgage rates.’
