The typical two-year fixed rate is now at 2.43%, a level not seen since September 2016, according to Moneyfacts data.
Over the last seven months alone rates have increased by an average 0.4 basis points, from 2.17% in September 2017.
Markets are pricing in a strong chance the Bank of England could raise the base rate when it meets again in May.
Mortgage rates increased ahead of the rate rise in November, and it appears lenders could be following the same pattern again.
At the same time, the Bank of England’s Term Funding Scheme (TFS) which provided cheap money to banks and building societies to fund mortgages and business loans also closed at the end of February.
David Hollingworth from broker London & Country said: “The increased anticipation of a rate rise has seen funding costs increase for lenders and that has been feeding through to the rates on offer, reflecting the higher swap rates.
“As a result, it’s little surprise that average rates have been nudging up and the days of a sub 1% two-year fixed rate now seem a distant memory.
“However, it’s important to keep things in perspective and while borrowers would be wise to act sooner rather than later there’s still some very attractive options on offer for borrowers looking to lock into a deal.
“As things stand though the overriding trend for fixed rates looks likely to see them edge up and borrowers that wait for the base rate to increase are likely to find that the best fixed rates will already have moved on.”
Time to remortgage
Borrowers have been urged to remortgage and secure deals sooner rather than later to take advantage of competitive offers.
Accord and West Brom building society have both announced a selection of rates cuts this week, while Sainsbury’s and Principality also reduced rates last week.
Craig McKinlay, sales and marketing director at Kensington Mortgages, said: “The growing noise around a potential rise should act as a wake-up call for those borrowers who haven’t yet remortgaged to speak to a broker to secure a deal that is beneficial to them.
“There are still plenty of great deals out there on the market and speaking to a broker can put borrowers, including those with more complex circumstances such as the self-employed, in a good position to find a mortgage that fits their needs.”