Two of the UK's biggest mortgage groups have increased their rates as lenders continue to pass on higher borrowing costs to homeowners.

Halifax, which writes one in every five new mortgages, has raised the cost of half of its fixed rate products by up to 0.5%, while five of its trackers have been increased by 0.3%.

Lloyds TSB has also increased its fixed rate deals, raising them by 0.3%, to give a two-year fixed rate mortgage of 6.44% for people borrowing 75% of their home's value, rising to 6.75% for people borrowing 90%.

Halifax blamed the move on the rising cost of borrowing through the wholesale money markets, with swap rates increasing steeply in recent weeks.

A Halifax spokeswoman said: "Over the past few weeks, most major lenders have increased their pricing on a number of occasions. Wholesale money is very expensive.

"In addition, swap rates have moved up in recent weeks, that means that fixed rates have become more expensive.
"Unfortunately, these increased costs have to be passed on to new customers by banks and building societies."

The group's new rates, which came into effect on Saturday, leave a two-year fixed rate mortgage for someone with at least a 25% deposit who is paying a £1,499 arrangement fee at 6.99%, compared with 5.59% at the beginning of the year, despite the Bank of England base rate being cut twice since then.

For people borrowing up to 90% of the value of their home the rate is even higher at 7.29%.