According to financial experts the interest rate charged on tracker mortgages has risen in May despite a drop in inter-bank lending rates and the Bank of England’s decision to hold the base rate.

Figures suggest that the rate charged for a mortgage with a 25% deposit rose from 3.86% in April to 3.99% in May, which suggests that many high-street lenders are still wary when it comes to giving loans to new borrowers.

Inter-bank lending rates, known as Libor rates have been declining steadily for the last few months but despite this many lenders are still looking to pass on a limited amount of the interest rate cuts.

"The latest Bank of England data on the interest rates charged on new lending to households suggest that banks are still failing to pass on any recent drops in their funding costs. The average quoted interest rate on a new tracker mortgage rose by 13 basis points in May, despite the fact that three month Libor rates have been on a steady downward trend,” said Vicky Redwood from Capital Economics.