Mortgage rates are at their highest for 11 years, new research from Moneyfacts.co.uk has found.

The study has revealed that the average rate on a two-year fixed rate mortgage now stands at 7.02 per cent. This is in spite of the freezing of the base rate by the Bank of England over the course of the year.

According to mortgage expert Darren Cook at Moneyfacts.co.uk, the rate rises are a an unfortunate result of the present climate. He said: "Any increased cost to lenders in arranging the funds on the money market is passed on to customers." Adding that, "Lenders are also taking an increased margin on top as they price their products for risk."

He continued "We hope that this recent downturn is not short lived and trust that lenders will play a fair game by reflecting this decrease in the rates that they will have on offer in the next few weeks."

As mortgage rates continue to rise, so too do mortgaqe set up fees, costing borrowers as much as £3,000 which, combined with increased rates and deposits, is pushing many buyers out of the market.

One mortgage lender that appears to have decide to take action is Abbey, who have announced a cut in fees on its flexible mortgage deals. Its flexible mortgages will be reduced by £1,000 to £1,499 from next week.