Barclays is increasing fixed mortgage rates for the second time this week as rising funding costs continue to force lenders to reprice.

The lender will make its latest increases tomorrow, Friday, having already raised rates on Tuesday.

The move comes amid a wider round of repricing, with Nationwide and Halifax among other major lenders making changes this week as volatility in global markets puts renewed pressure on mortgage pricing.

September has already seen a sharp increase in the cost of fixed-rate borrowing.

TWO-YEAR RATES JUMP

The average of the lowest two-year remortgage fixed rates offered by the UK’s 10 biggest lenders increased from 4.68% at the beginning of September to 5.11% yesterday, according to L&C Mortgages.

The 0.43 percentage point increase would add almost £50 a month – or around £600 a year – to repayments on a £200,000 repayment mortgage over 25 years.

The latest increases will add to the payment shock facing borrowers coming off older fixed deals, particularly those who secured mortgages five years ago when rates of 2% or below were still available.

Further volatility in funding markets could also lead to additional repricing as lenders respond to changes in their own borrowing costs.

‘MARKET CAN CHANGE QUICKLY’

David Hollingworth (main picture, inset), associate director at L&C Mortgages, said: “Barclays’ latest move highlights just how quickly the mortgage market can change.

“Rising funding costs are putting pressure on lenders which may lead to further repricing in the weeks ahead. Borrowers who are considering fixing would be wise to act sooner rather than later.

“Rates can be pulled from the market with little or no notice, so securing an option now offers protection against further upward pricing movements, while retaining the flexibility to switch if conditions become more favourable before completion.”