The average cost of a fixed rate mortgage stands at its highest level in six months as lenders pass on rising funding costs to borrowers.
The cost to lenders of raising funding on the swap rate market has soared in recent months. At the end of November, the two-year swap rate stood at 1.35% and today it stands at 1.98%, which is a rise of 47%.
Michelle Slade, spokesperson for Moneyfacts.co.uk, says: "The majority of lenders have increased rates since the start of the year, with some mortgage deals seeing rate rises of more than 0.50%.
"Borrowers who have delayed the decision to commit to a new fixed deal will now find themselves having to pay higher monthly payments."
On a mortgage of £150,000, a 0.50% increase in rate would add £42 per month to a borrower's repayments.
However, the rising fixed rates offer a silver lining to savers because rising swap rates mean lenders would prefer to raise funding in-house, so have increased savings rates to attract higher levels of deposits.
"Any rise in base rate would push mortgage rates higher, so borrowers looking to fix their repayments should act sooner rather than later," said Slade.
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