The Bank of England has raised rates three times since December and lenders have wasted no time in passing the higher costs onto borrowers, with the best mortgage rates now disappearing within days of launching.
The threat of further increases has spurred borrowers to lock in fixed-rate deals while they last.
Ashley Thomas of broker Magni Finance said: “We have seen a large increase in clients looking to fix for five or 10 years, whereas historically two-year fixes were preferred. It would be prudent to lock a fixed rate as soon as possible.”
Meanwhile, house prices defied predictions of a slowdown and climbed to a record high. Average sale prices rose by 14.3pc in the year to March, according to Nationwide, which was the highest level in 18 years. The average home now costs £265,312, according to the building society.
Graham Cox, of Self Employed Mortgage Hub, another broker, said borrowers were “stuck between a rock and a hard place” in the face of rising interest rates and record house prices.
“Those who can afford to buy now are still eager to do so,” he said. “While they know house prices could soon cool, they are also aware mortgage rates are likely to go up further and lenders’ affordability assessments are getting tougher.
“The dilemma then is whether to buy now, or to sit tight and wait for lower prices.”
Mortgage searches grew fastest in the £250,000 to £500,000 range in March, up 14.6pc month-on-month, according to Twenty7Tec.
But house price inflation has meant more demand for mortgages to buy properties priced at £1m and above. Almost one in 20 mortgage searches is now for a house valued above £1m.
Mr Reilly said: “A house valued at £950,000 last year may well be above the £1m mark now. This part of the market is less susceptible to the financial challenges we have seen at the other end of the property ladder.”