The higher number of customers on fixed rate mortgages has left the Bank of England with greater uncertainty about how long to raise interest rates, a former rate setter has suggested.

Britain’s mortgage market has been thrown into chaos by economic data this week showing wages rising at a record rate.

Traders are increasing bets that the Bank of England will increase interest rates to 5.75pc by the end of the year, prompting lenders to pull mortgage deals and increase their rates.

Part of the reason the Bank is still raising rates is that a greater number of customers are on fixed rate mortgage deals, according to Michael Saunders, who served on the Monetary Policy Committee until August.

Mr Saunders, a senior economic adviser at Oxford Economics, said the time it takes for rates to pass through to the economy “probably has got significantly longer — not just by a month or two”.

He added: “It just makes it harder for them to calibrate the correct policy path.”

The Bank of England estimates only a third of the rate increases since the end of 2021 have fed through to consumers and businesses. 

The nine-member Monetary Policy Committee is widely expected to raise interest rates again next week and push them to the highest in two decades by the end of the year.

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