Mortgage rates for new borrowers continued to rise during May despite interest rates being kept on hold, figures showed today.

The average cost of certain fixed rate deals jumped to a new eight year high during the month as lenders continued the trend to raise their rates to reflect the problems in the market caused by the credit crunch.

The average cost of a two-year fixed rate mortgage for someone with a 25% deposit rose by 0.21% during May to 6.27%, its highest level since September 2000, when interest rates were at 6%.

The change was even steeper for people taking out a five-year fixed rate loan with the same size deposit, with the cost of these deals rising to 6.11% compared with 5.85% in April