Britain’s banks stand to reap a £900m windfall from the recovery as mortgages look set to rise for the first time in a year.

Brokers have warned that the average five-year fix could hit 6% within weeks, up from 5.6% at the start of last week and as little as 3.95% three months ago. Deals as low as 4.5% are still available but they are expected to disappear fast.

Lenders are blaming a sharp rise in the cost of funding mortgages in the money markets, where rates have risen as the City becomes more optimistic about a recovery.

However, research for The Sunday Times by Capital Economics, based on Bank of England data, has found the rises are as much to do with bank profits.

The average five-year fix of 4.92% in May was 1.84 percentage points above the cost of funding. A year ago, when the average five-year deal was 6.11%, the margin was just 0.87 — so lenders are pocketing an extra 0.97 points. They have boosted margins on two-year fixes by a similar amount over the past year.

With fixed-rate mortgages accounting for 69% of the £7.25 billion of loans made last month, according to the Council of Mortgage Lenders, the rise in margins nets banks an extra £72.5m a month or around £870m a year.

Seema Shah of Capital Economics said: “Lenders are pricing a bigger margin today than at the peak of the credit crunch last September. This is boosting profits but it’s also a way of rationing credit. Over the past decade we’ve seen tiny margins or loss-making loans. What we have now is more similar to what we saw in the early 1990s.”

The rapid change in the outlook for rates came as the National Institute of Economic and Social Research declared last week that the recession probably ended in March, with economic growth rising slightly in April and May.

Economists cautioned against a return to boom conditions but the move nevertheless pushed up sterling against a basket of currencies.

Yet while mortgage rates are going up, savings rates are falling, as banks target other ways to boost their margins.

On Friday, Marks & Spencer became the latest institution to cut its Isa rates. Its Advantage Cash Isa was reduced by 0.60% points to 2.50%.

We look at what prospects for economic recovery mean for your finances.