BORROWERS trying to refinance their home loans are finding that mortgage rates are rising even faster than the Bank of England is increasing its base rate.

The average 2-year fixed-rate home loan is now more than 4 per cent in the UK, the first time it’s reached that threshold since February 2013, according to data compiled by Moneyfacts Group. That could affect the more than 3 million homeowners who are due to see their fixed-rate deals expire either this year or next.

Home price growth in the UK will come to a halt if mortgage rates hit 4 per cent and values will probably dip if rates climb above that level, property portal Zoopla warned earlier this month. The average 5-year fixed rate mortgage had already breached 4 per cent in recent weeks.

“We have seen lenders withdraw parts of, or entire product ranges, with a number citing the pause in lending being due to unprecedented demand,” said Eleanor Williams, a spokeswoman for Moneyfacts.

The 2-year fixed rate has risen 1.75 percentage points since December, Moneyfacts said, compared with a 1.65 percentage point increase by the central bank as it attempts to bring inflation under control.

Lenders are offering mortgage products for an average of 17 days, a record low, and there are fewer options available to customers, the data provider said.

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“Providers need to manage their service levels following an influx of applications, as borrowers have rushed to secure deals before rates have a chance to climb even further,” Williams said. BLOOMBERG