Mortgage rates continue to increase despite the Bank of England’s decision to cut interest rates last week.

Yesterday, the final sub-4% fixed rates on offer from major banks and building societies were withdrawn from the market.

So far this week, several high street lenders have increased their mortgage rates in response to higher swap rates, while market expectations about how quickly, and how low, interest rates will fall in future have shifted of late.

The Bank of England base rate is still expected to fall over time, but markets are now questioning if the pace will be as rapid.

At the start of this year, markets were pricing in six or seven base rate cuts in 2024, with investors betting on rates falling to 3.75% or 3.5% by Christmas.

While lenders have cut rates on mortgage tracker deals, which benefit around 1.4 million borrowers, fixed rate mortgages, which are the product of choice for 7 million households, are being pushed higher.

Only a couple of months ago, there were more than a dozen or so banks offering sub-4% rates.

David Hollingworth, associate director at mortgage broker L&C Mortgages, commented: “The slew of rate changes in recent weeks has continued to push rates higher, reflecting the higher costs for lenders, as the market outlook for rates has edged toward a “higher for longer” expectation.

“A number of lenders managed to hold fixed rates below 4%, until now.

“As sharper rates have fallen away, an air of inevitability was building and now all major UK lenders’ fixed rates have once again edged back above 4%.”

Hollingworth added: “Unwelcome as it is for borrowers, it’s important to note that there’s no sign of rates skyrocketing as they have in recent years.

“The Bank of England base rate is still expected to fall over time, but markets are questioning if the pace will be as rapid.

“Forecasting and perception change frequently but for now borrowers should grab a rate whilst they can, to avoid missing out if the deal is subsequently withdrawn.”