The death knell was sounded for the cheap fixed mortgage tonight as Britain's biggest lender raised rates by up to 0.5 per cent.

Halifax  -  which provides one in five new mortgages  -  pushed up the cost of more than half of its fixed-rate deals.

It became the last of the 'Big Four' to impose massive rate rises on cash-strapped homeowners this week.

End of the cheap fixed mortgage: Repayments on a typical £155,000 mortgage at the current Halifax two-year fixed rate will cost an extra £135 per month

In January, it was possible to get a two-year fixed rate mortgage with the Halifax at 5.59 per cent.

From today, the rate will be 6.99 per cent.

The huge rise means the monthly repayments on a typical £155,000 mortgage will have jumped by £135 since the start of the year.

Over the two-year life of the deal, the extra cost balloons to an astonishing £3,240.

The rate rises from the four big lenders  -  Halifax, Nationwide, Abbey and Lloyds TSB  -  will have huge consequences because they control nearly 50 per cent of the mortgage market.

The governor of the Bank of England Mervyn King warned this week that expensive mortgages are here to stay

It comes in the week that the Bank of England governor Mervyn King warned homeowners that expensive mortgages are here to stay.

In a blunt assessment of the market, he said: 'The era of cheap mortgage finance is over.'

Fixed-rate deals, which used to be so popular, have now become virtually unaffordable.

They became hugely popular among homeowners who liked the security of knowing how much money they would have to find every month.

Last summer, before the credit crunch struck, nearly 80 per cent of customers took out a fixed-rate deal, typically for two or three years.

But these deals are disappearing  -  and the ones that are left are much more expensive and also charge huge fees of up to £5,000.

Just 59 per cent of those who bought a home or remortgaged in April took out a fixed-rate deal, according to figures from the Council of Mortgage Lenders.

And the 1.4million homeowners whose fixed-rate deal expires this year face a huge 'payment shock' with many being forced into drastic measures, such as switching to an interest-only deal.

Darren Cook, a mortgage expert at the financial information firm Moneyfacts, said: 'It is a nightmare.

'If you are coming off a two-year deal which you took out in 2006, the rate you get today will be much higher.

'Affordability is a massive issue.'

His research shows the costs of two-year fixed-rate mortgages are at their highest level for a decade.

The interest rate on a typical two-year fixed-rate deal is 6.75 per cent, its highest level since 1998.

Banks and building societies insist they do not have a choice because swap rates  -  which dictate the level at which lenders price their fixed-rate deals  -  have soared.

Halifax became the last of the 'big four' lenders - including Nationwide, Abbey and Lloyds TSB - to impose hefty rate rises as it pushed up the cost of more than half of its fixed-rate deals by up to 0.5 per cent this week

On June 2, the two-year swap rate was 5.84 per cent.

This week, it is around 6.49 per cent.

Richard Morea, of independent mortgage brokers London & Country, said: 'It is another blow for borrowers, particularly for those who are coming off short-term fixed-rate deals.'

Homeowners face a dilemma about what to do when their current mortgage deal runs out.

With speculation that the Bank of England will raise interest rates, currently 5 per cent, many will want to fix to protect themselves from future rises.

But the cost of a fixed-rate mortgage will deter many from taking out a deal.

If you want to borrow up to 95 per cent of the property's value, which is popular among first-time buyers, the rates are even higher.

When Halifax raises its rates today, a three-year fixed deal will jump from 7.39 per cent to 7.89 per cent.

Yesterday a Halifax spokesman said 19 of its 31 fixed-rate deals are going up by an average of 0.42 percentage points.

Five tracker deals are also going up.

He 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.'

Mr Morea urged those who are struggling with their mortgage to consider two measures  -  switching to an interest-only mortgage or extending the life of their mortgage.

Both moves, which should be done only temporarily, dramatically cut the monthly cost of a mortgage.

•THE FTSE 100 index fell through the 5,700 barrier for the first time in three months yesterday. Banks were the biggest fallers, led by Halifax Bank of Scotland, after analysts downgraded profit forecasts.

Fears over customer debts wiped almost 5 per cent off the group's shares.

Barclays and Royal Bank of Scotland fared little better amid City fears that earnings will be hit by the housing downturn, rising unemployment and concerns about oil and food prices.

The index closed at 5620.8, down 87.6.