PEOPLE searching for a new mortgage are seeing the rates charged on two-year fixed-rate deals rise at their fastest pace in over two years.

The increases mean someone applying for a two-year fix at the beginning of last month would have typically been offered a rate of 3.52%, but by last week this would have jumped to 3.61% on average, according to a financial website.

This difference would add up to nearly £300 extra having to be paid over the term of a £250,000 mortgage.

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The 0.09% increase seen on rates charged for two-year fixes across all loans-to-value is the sharpest rise seen over the space of one month since February 2012, said Moneyfacts.co.uk.

Toughened mortgage lending rules came into force last month and some experts have suggested lenders might consider tweaking their rates upwards slightly to slow the flow of applications while their systems adjust to the changes brought in under the Mortgage Market Review.