Alliance & Leicester raise mortgage rates for second time in a week

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Alliance & Leicester today announced it was raising rates on its entire mortgage range for the second time this week.

The group, which is one of the UK's top 10 lenders, is increasing the majority of its rates by 0.2 per cent, although some are being raised by 0.35 per cent.

The new rates will come into effect on Friday, just three days after it last raised its prices.

A spokesman said: "We look at our pricing daily in terms of what is going on in the rest of the market."

Their move follows official figures revealing that the annual cost of paying a mortgage has soared by up to £400 in only four weeks, official figures reveal.

For some types of deals, homeowners are now paying the highest interest rate for nearly a decade.

The figures, from the Bank of England, show the full scale of the assault on house buyers who cannot afford to put down a big deposit.

The biggest losers are those taking out a two-year discount mortgage with a deposit of only five per cent.

In February, the average rate was 6.11 per cent. In March, it had shot up to 6.44 per cent, the highest since January 1999. This will add £32 a month, or £384 a year, to the cost of a typical £155,000 repayment mortgage.

Experts warned that mortgage costs across the board are likely to keep on rising - even if the Bank of England cuts interest rates today.

Despite the base rate falling in February, average mortgage rates have risen for nearly all types of deals.

From today, new fixed-rate deals from the Woolwich, owned by Barclays, will be up to 0.6 percentage points higher than its previous deals.

Last week, you could have got a two-year fixed rate deal of 5.89 per cent if you had a 20 per cent deposit. Today, the rate will be 6.49 per cent.

Ray Boulger, from mortgage brokers John Charcol, said homeowners should expect rates to keep on climbing.