A major lender has increased its fixed mortgage rates, as experts warn others may follow suit.
HSBC has upped its rates by as much as 0.26 percentage points with its two-year fixed deal for those with 5 per cent deposit or equity rising from 5.79 per cent to 6.05 per cent.
Its two-year fixed rates for those with 10 per cent deposit or equity also rose from 5.23 per cent to 5.49 per cent.
Although “relatively small” increases, experts believe that others may make the decision to up theirs in response.
Nick Mendes, of brokers John Charcol, said: “HSBC have done well to have held their fixed rates for as long as they have, considering their last reprice saw many of their fixed rates decrease.
“In between that time markets have overwhelming revised their forecast of the next Bank of England rate reduction now to August. With HSBC holding out amongst the best buys for as long as they have is quite an achievement.
“I suspect that this latest reprice will put pressure on Barclays, Santander, TSB and potentially Halifax to review their pricing to adjust for increase in demand.”
This could be due to swap rates, which are based on long-term predictions for where interest rates will go and have a major bearing on the pricing of fixed-rate mortgages, being volatile in recent times.
Rachel Springall, finance expert at Moneyfactscompare.co.uk said: “The swap rate market has been notably volatile over the past month, and rises are having an impact on fixed rates.
“Fixed pricing will remain a key focus for lenders reviewing their margins in the coming weeks.”
It has also been suggested HSBC may have priced upwards due to rising demand for services, a common practice by lenders.
David Hollingworth of L&C Mortgages said: “Although HSBC has increased rates by a relatively small amount, this looks set to be one of a number as the market shifts again.
“I would expect that we will see some more increases this week as other lenders will inevitably have to reprice as others shift around them. It looks as though the markets are feeling that rates may stay higher for longer.
“That sentiment could be partly affected by the election announcement which inevitably brings a degree of uncertainty.”
A number of smaller providers including Principality, Saffron and Vernon building societies, have also withdrawn selected mortgage deals for those with lower deposits or equity.
However, Mr Mendes believes that rates will come back down again. He said: “This reprice is just to give them some breathing space and move of the top of the best buys, am sure we will see HSBC reprice downwards soon.”
Others believe rates will come down again once interest rates start to fall from their current level of 5.25 per cent.
Aaron Strutt, of brokers Trinity Financial, said: “Other banks and building societies may well push up their prices but the consensus is still they will come down again when the Bank finally lowers the base rate.
“Some of the lenders are not getting in as much business as they would like, so they may well lower their profit margins to attract borrowers.”