People looking for a two-year fixed-rate mortgage will be offered deals with interest of more than 5% for the first time since January.
In response to a rates increase by Nationwide other lenders are now charging an average of 5.04% to homeowners who want to fix their repayments for two years, up from 4.92% and 4.74% earlier in the week.
Nationwide increased the cost of some of its fixed-rate deals for the second time in two weeks followed by the Woolwich, which raised the cost of one of its two-year fixed rate deals by 0.7%.
It is now expected other lenders, who have not already done so, will follow suit and hike rates in line with other deals on the market.
The hikes have been blamed on an increase in swap rates, which are used to determine fixed-rate deals.
On June 11 two-year swaps rose from 1.98% to 2.51%, but it takes 10 days for the rise to felt by customers in the mortgages market.
However, it is thought lenders are now matching their rate hikes to other lenders as well as wholesale funding costs in a bid to remain competitive while clawing back some of their returns on interest rates, which have plummeted since the start of the credit crunch.
If any group offers a rate that stands out as being very competitive its administrative arms have difficulty keeping up with the influx in business.
In response to the latest rate hikes Barclays' lending arm the Woolwich increased the cost of its two-year fixed-rate mortgage for people with a 20% deposit by 0.7% to 5.99%, with other two-year deals rising by 0.2% and five-year ones increasing by 0.5%.
A Barclays spokesman said: "The cost of mortgage funding has been pushed up recently, with Barclays being one of only a handful of lenders which are still offering competitive mortgages.
"In light of our competitors moving their rates upwards in the last few days, we have seen a massive demand for our mortgages, and so in order to control the flow of business we have had to adjust our mortgage range in line with the market place."
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