Borrowers are being faced with higher rates on tracker mortgages.
Mortgage lender the Woolwich has blamed strong demand from consumers for its decision to put up rates on its tracker deals. The company said recent increases made by other lenders had led to a flood of new business.
"Last week we immediately passed on the full Bank of England base rate cut of 0.5 percent, but as a result of changes elsewhere in the market we now need to control the flow of business by making some slight increases to the rates on our tracker mortgages," said head of mortgages Andy Gray.
The move comes after Lloyds TSB put up some of its tracker rates by up to 0.5 percent, despite a half percentage point cut in base rates by the Bank of England last week. Nationwide and Northern Rock decided to pass on some, but not all of the reduction to customers.
Melanie Bien from the mortgage brokers Savills Private Finance told the Telegraph that with inflation predicted to fall, further base rate cuts are "inevitable". However, she said these will only affect the price of tracker mortgages if the rates at which banks lend to one another - known as Libor rates - begin to fall.
Figures from the Council of Mortgage Lenders show that the proportion of borrowers choosing tracker deals increased to 31 percent in August, up from 28 percent in July.
