Britain's biggest mortgage lenders have hit borrowers with sweeping increases to the cost of fixed-rate mortgages, prompting accusations of profiteering and fears that the housing market recovery could be put in jeopardy.

Cheltenham & Gloucester (C&G) is raising the cost of its most popular fixed-rate deals by up to 0.7 percentage points from today. A five-year deal for borrowers with a 15 per cent deposit is jumping from 6.49 per cent to 7.19 per cent, adding more than £1,000 a year to the cost of repayments on a £150,000 interest-only home loan.

Halifax, Britain's biggest lender, is increasing its fixed-rate deals by up to 0.6 percentage points. A five-year fix for customers with a 25 per cent deposit is jumping from 5.29 per cent to 5.89 per cent.

Both lenders are owned by Lloyds Banking Group, which dominates the UK mortgage market with a 30 per cent share of all home loans.

Abbey, the UK's second biggest lender, and Alliance & Leicester, both owned by Santander, also announced hikes of up to half a point on their fixes today. Most other lenders are expected to follow suit in the coming days.

It follows a round of mortgage rate increases last week which saw Nationwide Building Society push up the cost of some of its fixes by up to 0.86 percentage points.

Around 1.2 million homeowners are coming to the end of their current mortgage deals this year, according to the Council of Mortgage Lenders, which released figures last week showing that more than two-thirds of borrowers are now opting for the security of fixes over variable-rate home loans.

Lloyds Banking Group and Santander have blamed a sharp rise in the cost of wholesale borrowing on moneymarkets for the decision to hike rates, but mortgage experts have argued that increases are more than the rise in funding costs to the lenders.

Two-year swap rates, the moneymarket rate which dictates the cost of two-year fixed-rate mortgages, have soared by 0.57 percentage points, from 1.98 per cent a month ago to 2.45 per cent in recent days. Five-year swap rates, which determine five-year fixed-rate mortgages, have increased by 0.65 per cent to stand at 3.79 per cent.

Experts suggested lenders were trying to control the flow of new applications and boost profit margins.

Ray Boulger, senior technical manager at John Charcol, a broker, said: "A key reason for lenders to increase rates is to deter business. When one lender increases rates, business goes to other lenders until those lenders hike rates as well.

"The lack of capacity in the market because of a lack of funds is forcing lenders to control the flow of applications with less attractive rates.

"A very welcome side effect is also to boost profit margins and repair battered balance sheets, although lenders would never admit it."

The cheapest five-year fixed-rate deal is currently available from the Post Office, with a rate of 4.45 per cent. It comes with a fee of £599 but is only available to borrowers with a 40 per cent deposit.

Borrowers with only a 10 per cent deposit can get a rate of 5.34 per cent - fixed for five years - from Britannia Building Society. It has a fee of £999.

Mortgage brokers are urging homeowners to choose longer-term deals to protect against a rise in interest rates by the Bank of England which is expected as early as the end of this year. However, there a fears that further jumps in the cost of borrower could deter new buyers to the housing market, derailing the economic recovery.

Mr Bougler said: "The more longer-term rates increase, the more likely that the recovery in the economy could be stiffled. Individuals could easily consider that the cost of funds has risen so much that they do want to put off the purchase of property.

"We are not there yet, but it could happen if rates continue to rise. We could find that a modest recovery is surpressed by higher rates and the economy could dive again."

Which lenders have increased fixes ?

C&G has raised rates by 0.7 percentage points on five-year fixes, 0.6 percentage points on three-year fixes and 0.4 percentage points on two-year fixes. A five-year fixed rate deal for borrowers with a 15 per cent deposit is jumping from 6.49 per cent to 7.19 per cent. C&G also increased a handful of residential and buy-to-let deals by up to 0.3 percentage points last week. A three-year fix for borrowers with a 25 per cent deposit increased to 5.59 per cent.

Halifax has increased two-year fixed rates by up to 0.4 percentage points, three-year fixes by up to 0.5 percentage points and five-year fixes by up to 0.6 percentage points. A two-year fixed-rate deal with borrowers with a 15 per cent deposit has increased from 6.44 per cent to 6.84 per cent.

Abbey and Alliance & Leciester are increasing two, three and five year fixes by between 0.2 percentage points and 0.5 percentage points.

Nationwide increased the cost of its entire fixed-rate mortgage range last week, hiking five-year fixes by up to 0.86 per cent, two-year fixes by up to 0.61 per cent and three-year fixed-rate deals by up to 0.26 percentage points. A five-year fix for borrowers with a 40 per cent deposit has climbed from 4.78 per cent to 5.64 per cent.

Northern Rock has increased fixed rates by up to 0.2 percentage points. A number of smaller building societies, including Principality, The Nottingham, Chelsea and Yorkshire, also raised rates last week.