Fixed mortgage rates leap in June

LONDON (Reuters) - The cost of taking out a new fixed-rate mortgage jumped by more than half a percentage point in June to its highest level this year, figures from the Bank of England showed on Thursday.

The rise partly reflects a shift in interest rate expectations, but it also casts doubt over banks' willingness to take on new lending and the potential for a housing market recovery.

The average rate on a two-year 75 percent loan-to-value mortgage rose by 51 basis points in June to 4.47 percent, its highest level since December.

The rate on a similar mortgage fixed for five years rose by 63 basis points to 5.56 percent, its highest level since October.

Two- and five-year swap rates -- which provide the benchmark for much mortgage lending -- jumped by around 40 basis points last month as a raft of economic data suggesting the economy was emerging from recession.

"It does fit with anecdotal evidence that lenders are withdrawing their best offers," said Brian Hilliard, chief UK economist at Societe Generale.

"Part of it reflects higher swap rates but it looks as though banks are widening their margins on top."

The average standard variable rate remained unchanged at 3.84 percent last month, close to the historic low set in April.

The Bank left interest rates at a rock-bottom 0.5 percent for a fourth consecutive month on Thursday but markets are pricing in a strong chance of higher rates by the end of the year.

(Reporting by Christina Fincher; editing by Chris Pizzey)