A bigger-than-expected rise in inflation is likely to put a price war between mortgage lenders on hold, experts have predicted.

Inflation rose from 2.5 to 3 per cent, according to figures released by the Office for National Statistics (ONS) on Wednesday, a bigger jump than economists had forecast.

Mortgage brokers have said that the increase could lead to some of the cheapest home loans on the market – several of which are under 4-per cent – being pulled, while the likelihood of cheaper deals being launched has decreased.

Lewis Shaw, a mortgage broker at Shaw Financial Services, said: “Today’s inflation figures make for dire reading, and the UK bond market’s reaction will be the key driver of how long the new sub-4 per cent mortgage deals are around.

“I suspect they’ll vanish in short order, which will come as a blow to the thousands of mortgage holders due to renew this year who are holding out hope for more favourable rates.”

Fixed mortgage prices follow swap rates, which are based on market predictions for where interest rates could go in the future.

Higher inflation means the Bank of England could consider keeping interest rates higher for longer with traders betting there is little chance that it will cut rates in March.

Coupled with higher-than-expected wage growth in figures released on Tuesday, this could mean the best deals on the mortgage market start to disappear, and cheaper ones do not appear as quickly.

David Hollingworth of L&C Mortgages said: “We’ll see how the swap markets react, but it would be little surprise if we see them edge a little higher again.

“Today’s data could put some serious drag on any further momentum building for fixed-rate cuts. With margins so tight for lenders, it could at best see fixed rates holding or at worst apply some upward pressure.

“The lowest fixed-rate deals could therefore be short-lived, as we’ve seen strong demand in the early part of the year from borrowers eager to snap up the best deal they can.”

Aaron Strutt of brokers Trinity Financial added: “Clearly, this is not great news and could quite easily mean the predicted reductions to the Bank of England rate may take longer to come through.

“The standard mortgage advice still stands, if you are one the significant number of homeowners who need to remortgage soon, it is a good idea to lock into one of the cheaper rates being offered.”

Last week, Barclays followed Santander in cutting rates to below 4 per cent for customers with large deposits or equity.

There were hopes at the time that other lenders may follow.

The Bank of England tends to lower interest rates as inflation gets closer to its 2 per cent target, but it forecasted that inflation would only rise to 2.8 per cent this month, rather than the 3 per cent figure that actually occurred.

Since the inflation reading, economists have poured cold water on the hopes of those expecting a rapid rate of interest rate cuts.

Robert Wood, chief economist at Pantheon Macroeconomics, said: “We think the bank of England would be ‘brave’ to keep cutting rates quarterly with wage growth around 6 per cent year-over-year – at least double the rate consistent with inflation at target – stalling rather than collapsing jobs, and inflation well above 3 per cent. We look for two more rate cuts this year, in May and November.”

Financial traders slightly reduced interest rate cut predictions for later this year after the inflation data was released, with some economists expecting they would reign back even further.

Writing on social media website X, Andrew Sentance, a former rate setter at the Bank of England, said he expected a bigger shift in expectations once markets were to “digest the prospect of 4 per cent plus inflation in the summer.”

Forecasters including Deutsche Bank Research are expecting inflation to rise above 4 per cent this year.

Should you get a fix now?

If your mortgage fix is coming to an end soon, it is worth starting to look at new deals around three months in advance.

Most lenders let you lock in a new deal several months before you need it to start, so you could currently lock in a rate now even if your deal ends in May.

Then, if rates rise, you have a cheaper deal locked in, and if rates do end up going down, you can switch to a cheaper deal.

Another option is to go for a tracker mortgage, which will go down if the Bank of England base rate does, and up if the Bank raises rates.

These are usually more expensive than fixes, but they do allow customers to bide their time before locking in a fix, which may get cheaper in the future.