Those looking at taking out a mortgage are unlikely to benefit from any interest rate cut.

There has been a steady increase in mortgage rates since the start of the year as lenders increase the price of their home loans reflect higher fund costs and to try to stifle demand.

The average cost of a new two-year fixed-rate mortgage for those with a 5% deposit reached a seven-and-a-half-year high of 6.64% at the end of March, according to the Bank of England.

And despite the Bank base rate being cut by 0.5% during the period, the average rate is now 0.17% higher than it was in November.

Fixed-rate mortgages are not the only ones to be increasing, with the average cost of all deals, except standard variable ones, rising during the past month, with new tracker rates increasing from 5.96% to 6.04%.

The problem is being partly caused by the interbank lending rate Libor currently being around 0.69% above the Bank of England base rate, when it would generally be below it at a time when interest rate cuts are expected.

Ray Boulger, senior technical manager at mortgage advise firm John Charcol, said a cut of 0.75% was needed just to put people in the position they would normally be in if interest rates were at 5.25%.

And lenders are failing to pass on base rate cuts in full to existing customers while other have increased their standard variable rates to them outside of changes to the official cost of borrowing.

Nearly one in five mortgage lenders had failed to pass on December's interest rate cut a month later, while others reduced their rates by just 0.15%.

A similar pattern was seen after February's interest rate cut, and around a fifth of lenders are expected to be equally unresponsive if the Bank reduces rates again.

Louise Cuming, head of mortgages at moneysupermarket.com, said: "We have seen increasingly that whatever happens with the Monetary Policy Committee is not translating into new products.

"The average cost of new products hasn't reflected the 0.5% reduction in base rates we have seen since August last year. That is where the credit crunch is hitting."

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