Britain's biggest mortgage lenders were accused of cheating borrowers today after two raised their mortgage rates despite an expected Bank of England cut.

Alliance & Leicester and Woolwich became the latest to increase the price of home loans in advance of the Bank decision.

City economists expect the base rate to be cut from 5.25 per cent to five per cent tomorrow. But borrowers will see little benefit from the easing of official rates after almost all the big lenders implemented a raft of mortgage increases.

Alliance & Leicester said it was raising its rates by between 0.1 and 0.15 per cent in the wake of similar changes by rivals Halifax and Abbey. The rate on its flagship two-year fixed mortgage will increase from 5.69 per cent to 5.84 per cent and remains "under review," a spokeswoman said.

It is understood that this rate will rise again to 6.04 per cent by the end of the week. Woolwich, the lending arm of Barclays, this morning announced further rate rises and said it would no longer offer two-year fixed deals to borrowers who do not have a deposit for at least 10 per cent of the property's value.

The Co-operative Bank said that it will also raise the rate on its five-year fixed deal from 5.54 per cent to 5.99 per cent.

The latest moves come as the Bank of England published figures showing that first-time buyer mortgage rates are spiralling to their highest level for almost eight years. Average two-year fixed rates for borrowers with only a fiveper cent deposit jumped from 6.55 per cent to 6.64 per cent last month, the dearest since June 2000.

Tracker rates also increased, going up from 5.96 per cent to 6.04 per cent, according to the Bank of England figures.

Borrowers with small deposits have seen the best deals snatched away from them as lenders have deliberately sought to deter the "riskiest" customers during the mortgage meltdown. And mortgage lenders have been accused of ripping off borrowers by not passing on any benefits of an interest rate cut by the Bank.

Last September, the average two-year fixed- rate mortgage cost just 6.32 percent for first-time buyers, compared with the Bank's official base rate of 5.75 per cent.

Since then base rates have been cut by 0.5 per cent, but the rate charged by banks and building societies have gone up by 0.32 per cent.

But City economists said the trend made it easier for the Bank to cut the base rates tomorrow as it will have little impact on households' spending power.

George Buckley, chief UK economist at Deutsche Bank, said: "If borrowers did not know what had happened to official rates, they would say they must have increased because of what they are seeing in their mortgage bills."

Almost half of all mortgage deals have been scrapped by lenders in recent months, including all the 100 per cent home loans. Abbey this week became the last of the major lenders to stop offering 100 per cent mortgages.

However, there was some better news for anxious borrowers today when HSBC said it would match other lenders' fixed rate deals from Monday.

The Bank is widely expected to make a 0.25 per cent cut in rates at noon, bringing them to five per cent, their lowest since January last year.

Hopes of a cut were raised by yesterday's gloomy Halifax housing survey, which showed prices nationally dipped 2.5 per cent last month.

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