The cost of the average two-year fixed rate mortgage has risen since the start of October on the back of speculation that the Bank of England may hike the base rate.
A 0.04 percentage point increase since 1 October has taken the average two-year fix to 2.24 per cent after 21 lenders upped their rates, according to data from Moneyfacts.
It comes after comments from Bank of England governor Mark Carney fuelled speculation of a base rate rise as early as 2 November, pushing up the two-year swap rate from 0.54 per cent to 0.82 per cent in the space of a month.
NatWest increased rates across its core residential range on 6 October, as well as reducing the amount of cashback on offer by up to £250.
Following the lenders’ moves, brokers told FTAdviser that intermediaries should consider encouraging clients to lock into a fixed rate deal if they had not already done so.
Charlotte Nelson, finance expert at Moneyfacts, said: “Providers are now starting to factor swap rate rises into their pricing, causing the average two-year fixed rate to start creeping up, and this new trend is showing no signs of abating yet.
“With rates having sat at record lows, it is difficult for providers to swallow the increased cost by any means other than increasing the rates on offer.
"As a result, lenders are now treading a fine line between needing to remain competitive to protect their mortgage book and absorbing the cost of higher swap rates.
“The combination of higher swaps and an increased Libor rate has furthermore given the mortgage market the strongest indication for some time that a base rate rise is likely.
"This means it is crunch time for borrowers looking to remortgage; it is vital they act fast to ensure they get the best possible deal before their rates increase.”
Mike Pendergast, IFA at Cheshire-based Zen Financial Services, said: “We have not had any enquiries about fixing the rates in the past couple of weeks.
“It is likely the base rate will go up, but we have not seen massive demand. I think people are fixed in already or don’t think the interest rate will go up.
“It is probably going to be a quarter of a per cent rise [in the base rate]. Once it happens, people might think they should do something about it.”