Average 2-year fixed rates have jumped from 4.85% to 5.56%, while 5-year fixes have increased from 4.97% to 5.54%, with lenders pricing in the likelihood of further base rate increases

Mortgage rates have risen sharply in recent weeks, with the average rate increasing from 4.91% to 5.50%, as shifting inflation expectations drive market volatility, according to analysis from Moneyfactscompare.co.uk.

Average 2-year fixed rates have jumped from 4.85% to 5.56%, while 5-year fixes have increased from 4.97% to 5.54%, with lenders pricing in the likelihood of further base rate increases.

The market has also seen significant product withdrawals, with more than 1,700 mortgage deals pulled since 9th March, as lenders react to rising swap rates and uncertainty linked to global events.

Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, said: The outlook for interest rates has changed drastically over the past few weeks, spurred by unstable swap rates caused by the conflict in the Middle East.

As a result, the mortgage market has been extremely volatile and over 1,700 products have been withdrawn since 9th March, she said.

While some of these deals have come back, they are at higher rates and it could be fair to assume many lenders may be taking this path, which could drive average rates up further, she said.

Currently, lenders are expecting several base rate hikes, which may be demoralising for borrowers, she said. Even just one 0.25% hike could push mortgage rates higher, but borrowers on trackers will quickly feel the force of these rises.

She said: Currently the average 2-year tracker is 4.55% and a small jump could take this to around 4.80%, adding almost £430 a year onto their loan.

The analysis suggests borrowers coming off fixed rates will face significantly higher costs, with around 1.8 million expected to refinance this year.

Eastell added: Around 1.8 million borrowers are expected to refinance this year; this includes those coming off low 5-year fixed rates.