Major financial institutions this week canceled all mortgages below 4%, despite the Bank of England's second benchmark interest rate cut.
Barclays and NatWest today became the latest major mortgage lenders to announce increases to fixed mortgage rates. 
This follows similar rate hikes by Santander, HSBC, Nationwide and TSB this week, as financial institutions scale back expectations for the pace of future central bank rate cuts.
L&C Mortgages points out that Allied Irish Bank is currently the only lender of its size offering interest rates below 4%.
This comes despite the Bank of England cutting borrowing costs by 0.25% to 4.75% last week. This is the central bank's second interest rate cut, following the 0.25% rate cut in August, and the first in four years.
But minutes from the central bank's interest rate-setting Monetary Policy Committee warned that the Budget announced last month by Chancellor of the Exchequer Rachel Reeves, which will spend around 70 billion pounds over the next five years, will push up inflation next year.
The agency expects quarterly economic growth a year from now to be 1.7%, compared with the 0.9% forecast in August.
However, this would mean inflation would be 2.7% instead of 2.2%, and it would take an extra year, until early 2027, for the cost of living to return to the 2% target. Borrowing costs are currently 1.7%.
Election campaign threats by US President-elect Donald Trump have caused further uncertainty.
President Trump has promised to impose tariffs of at least 10% on European imports, primarily aimed at the auto industry, and up to 60% on a wide range of imports from China.
In response to this, Goldman Sachs lowered the UK economy's growth rate for next year to 1.4% from its previous forecast of 1.6% in a report earlier this month. The growth rate in 2026 is expected to remain at 1.4%.
David Hollingworth, associate director at L&C Mortgages, said: “The repeated changes in interest rates in recent weeks have tilted the market's outlook towards higher interest rates over the long term, reflecting rising costs for lenders. “Interest rates continue to rise.”
“Many financial institutions have historically managed to keep fixed rates below 4%. As the spike in interest rates unwinds, there is an air of inevitability and now all major UK financial institutions have fixed rates once again. It is gradually exceeding 4%.
Hollingworth added: “While this is not welcome for borrowers, it is important to note that there is no sign that interest rates will skyrocket as they have in recent years.”
“We expect the Bank of England's benchmark interest rate to continue to fall over time, but the market is questioning whether it will be that fast.”
Money markets expect the European Central Bank to cut interest rates by at least five quarter points as the euro zone economy slows, while the Bank of England only expects two rate cuts next year.
