Five lenders hiked the price on their mortgage deals to kick off the week as the threat of the Bank of England increasing interest rates looms over the UK economy.

Barclays has raised its rates on a fleet of products by nearly 0.2 per cent, with its two-year fixed rate rising to 5.53 per cent and five year-fix hitting 5.48 per cent.

High street unit TSB – which was snapped up by Santander last year for £2.7bn – has increased a batch of residential mortgage products by 0.15 per cent.

Santander, Skipton Building Society and Nottingham Building Society were all among lenders also increasing their rates.

Volatility in the market has been driven by the re-pricing of swap rates, which serve as a primary benchmark for pricing fixed-rate mortgages and reflect expectations for future interest rates over two, five, or 10-year terms.

Swap rates have been hit by the ongoing conflict in the Middle East that have left investors and economists adjusting inflation expectations for the coming year.

The average five-year fixed homeowner mortgage rate has creeped up to 5.68 per cent from 5.64 per cent on Friday. This marked the highest average rate since 11 May, according to financial information platform Moneyfacts. The average two-year jumped to 5.63 per cent from 5.6 per cent.

‘More rate moves expected in coming days’

“The recent uplift in swap rates has started to filter into the pricing of fixed-rate mortgages, with more moves expected in the coming days,” Rachel Springall, finance expert at Moneyfacts, said.

She added the renewed pressure on the swap rate market had made it “somewhat inevitable” for lenders to respond.

It comes as Brent crude – the international benchmark for oil prices – closed in on $100 per barrel on Tuesday morning in a major warning sign for inflation.

This has also helped push gilt yields higher, with the two-year yield, which measures short term interest rate expectations, hovering around the 4.5 per cent mark for the last week.

The Bank of England has left interest rates at 3.75 per cent but struck a cautious tone in previous Monetary Policy Committee meetings. The committee will meet next Thursday for its next rate decision.

Some City analysts have suggested a hike could come as soon as November. The Bank’s chief economist Huw Pill has advocated for an increase to the bate rate and criticised a “wait-and-see” approach.

Pill has urged his peers to act “clearly, promptly and decisively” at its next decision on 17 September.