Banks are raising the cost of long-term mortgage deals as more customers opt to lock in to competitive fixed rates.

This week, Woolwich increased the rate on its five-year mortgages by up to 30 basis points to 4.69 per cent.

As borrowers favour the security of longer-term fixes, more lenders are expected to raise their rates.

Coutts recently removed its five-year fixed rate, saying that the deal had been “flying off the shelf”. The private bank said it was now considering offering longer- term home loans of seven or 10 years to meet demand.

Borrowers seeking a five-year deal have already missed out on a 3.95 per cent mortgage previously available from Abbey, leaving the best rate of 4.15 per cent from The Post Office.

In the past few weeks, five-year swap rates have risen, making it more expensive for banks to lend money for that period of time. But brokers said increased demand had also put pressure on service levels, forcing banks to push up rates.

“We expect other lenders to follow Woolwich if they experience similar demand,” said Melanie Bien at Savills Private Finance.

Lloyds, the UK’s largest mortgage provider, said it had already seen an increase in the popularity of five-year fixed-rate mortgages in the last few months.

“People are taking the advice of professionals and fixing for longer,” said Ray Boulger at John Charcol, the mortgage broker. “We are likely to see rates for longer- term fixes bobbing up and down as lenders react to the increased interest.”