Despite a recent reduction from the Bank of England, mortgage rates are on the rise, with the average two-year fixed-rate now at 5.5%.

Major lenders like Barclays, HSBC, NatWest, and Nationwide have increased their rates on new fixed deals, contradicting expectations of cheaper borrowing costs following the central bank's decision to cut the base rate from 5% to 4.75% on November 7.

The increase is linked to broader economic changes, including the latest Budget, which has increased borrowing costs overall.

Fixed-rate mortgages, which account for over 80% of UK contracts, are unaffected by immediate rate changes but are influenced by market expectations.

With more than 800,000 fixed-rate mortgages due to expire each year until 2027, borrowers could be impacted by these rising rates.

According to Moneyfacts, fixed mortgage rates had peaked at 6.85% in August 2023 before the recent increase.

Future interest rate cuts, according to Bank of England Governor Andrew Bailey, are expected to occur gradually, but not at a rapid pace, affecting lender pricing strategies.

This shift was influenced by the Budget's economic implications, as fiscal measures could push prices up, requiring maintained higher interest rates.

Mortgage expert David Hollingworth notes rates are rising because of the expectation that rates will remain higher for longer, even amidst a general expectation of eventual declines.

Strategies like making overpayments, switching to interest-only plans, or extending mortgage terms are some options borrowers might consider to manage costs in the current economic climate.