NatWest Group PLC (LSE:NWG) and Barclays PLC (LSE:BARC) are among several lenders raising mortgage rates for the second time in a month.
Despite the Bank of England cutting the base rate last week, money markets have been moving to price-in a slower rate of policy loosening in coming months and years due to worries that inflation will creep back up as the UK government increases spending on the NHS, schools and other infrastructure, along with new trade policies from returning US president Donald Trump.
On the swaps market, which prices future interest rate expectations, five-year SONIA swaps were at 4.05% and two-year swaps were at 4.26% as of 12 November, up from 3.8% and 4.0% a month earlier.
Following moves from Santander earlier in the week, NatWest announced a 35 basis points increase to fixed rates from today, 14 November.
Fellow FTSE 100-listed lender Barclays made similar moves, including lifting its five-year fixed rate from 3.96% to 4.28%.
NatWest and Barclays both raised mortgage rates less than a month ago.
After several lenders made their move yesterday, NatWest was the "last one standing" on its mortgage prices, said Justin Moy, managing director at EHF Mortgages in Chelmsford.
"These significant increases of up to 0.35% will hurt borrowers' pockets, as Swap rates spiral off the recent uncertainty. A falling base rate doesn't mean that mortgage rates always follow suit; it's quite the reverse at the moment, and the outlook doesn't have a lot of festive cheer either."
Indeed, after the BoE rate cut last week, David Stirling, independent financial advisor at Mint Mortgages & Protection in Belfast, said: "While this is disappointing news for borrowers, it has been expected, as behind the scenes the actual cost of money for the banks has also been increasing.
"Add a touch of uneasiness from post-Budget information and world politics and it's hard to see things level out much for the rest of the year, with the odds of a further rate cut in December diminishing."
Stephen Perkins, managing director at Yellow Brick Mortgages, said: "We shouldn’t see continued rises and things may soon start to calm down."