According to new data, major mortgage lenders are boosting the cost of home loans, with the average two-year fixed rate already approaching 6%.

Moneyfacts reported that a typical two-year fixed rate that was priced at 2.34 percent at the beginning of December is now priced at 5.75 percent.

In recent days, the cost has increased by one percentage point as the sector changed its economic forecast.

Numerous arrangements were withdrawn by lenders, leaving some debtors in a tough position.

The majority of the re-priced agreements have originated from major lenders seeking relatively low-risk borrowers. In the short term, homeowners with significant levels of debt or who have skipped credit repayments may find themselves with fewer options.

There is still money available for mortgage lenders to lend, according to brokers, but the era of exceptionally low-interest rates is passed.

We did not anticipate that to occur so quickly, said one broker.

Since the Bank of England began a sequence of seven consecutive increases in the Bank rate – the benchmark for interest rates – mortgage rates have risen. After the mini-budget caused widespread anticipation of a faster and larger increase in the Bank rate in the following months, rates increased.

When determining rates for fixed rate deals, lenders consider the long-term cost of borrowing and anticipated demand and attempt to stay one step ahead of the Bank of England.

Every month, over 100,000 individuals reach the end of a fixed agreement and frequently remortgage, while first-time buyers also join up for fixed arrangements. The costs of the 1.5 million homeowners with variable or tracker mortgages frequently increase in response to a Bank rate increase.

For some years, a typical five-year fixed term has been marginally less expensive than a two-year fixed deal, but both are presently experiencing sharp rate increases.

According to Aaron Strutt of Trinity Financial, the lending norms have shifted.

Major lenders such as NatWest, Nationwide, and Virgin Money have upped their rates in recent days.

According to brokers, the fact that NatWest modified on a Sunday, a highly rare day of the week for such a move, indicates the rate at which the market is changing.

A week ago, a homeowner borrowing £200,000 on a 30-year mortgage could have anticipated a rate of 3.5% and a monthly payment of £898. Now, the likelihood of a 5.5% interest rate and a monthly repayment of £1,135 has increased.

There is perpetual ambiguity over the longer-term trend of mortgage rates. People will need to examine how much they can borrow and how much lenders believe they can afford.

Amid last week’s turbulence, lenders pulled transactions from the market at an unprecedented rate, with brokers reporting that agreements lasted for a very brief length of time as inquiries overwhelmed them and lenders.

Moneyfacts reported that there were 3,961 discounts available on the morning of the mini-budget, a 43% decrease from the 2,262 deals available at the beginning of the week. In the past, products were withdrawn rapidly at the onset of a pandemic, but not to this extent.

Numerous transactions were withdrawn by smaller, specialized lenders. This may increase the level of unpredictability for those with less stable credit histories.