Almost 800 mortgage applications were cancelled due to rate uncertainty.

According to statistics, since last week, about 10% of mortgage applications in the UK have been pulled off the market due to worries about how high interest rates may rise.

Almost 800 residential and buy-to-let deals, according to financial data company Moneyfacts, were cancelled after lenders revaluated their offers.

Average interest rates on deals with terms of two and five years have also increased.

This comes after higher-than-anticipated inflation numbers heightened expectations for the rate increase in the UK

According to official data released this week, the UK's inflation rate, which tracks the rate of rising prices, fell less than anticipated to 8.7% in April.

Investors now believe the Bank of England will need to boost interest rates above their present level of 4.5% to as high as 5.5% in order to try and slow price increases. This sparked a robust response in the markets.

Mortgage rates have increased as a result of the significant price and interest rate changes caused by the shift in intentions in the bond markets. Lenders now use higher "swap rates" to determine the cost of house loans.

Moneyfacts reports that from the beginning of the previous week, there have been 373 fewer residential mortgage applications completed on the UK market, bringing the total to 5,012 deals.

There are now 2,343 fewer buy-to-let mortgages than there were before.

Mortgage rates have increased as well; the average rate for a two-year fixed plan is now 5.38%, while the average rate for a five-year fixed plan is 5.05%.

They are much higher than what they were in May of last year, when the two- and five-year fixed rates were 3.03% and 3.17%, respectively. However, they are still quite a bit lower than the rates that were observed in October of that year, right after the mini-budget alarmed the markets and raised borrowing costs.

Due to rising borrowing costs that are reducing people's purchasing power, property values have been declining over the past six months.

However, earlier on Tuesday, the real estate website Zoopla reported that sales agreed had reached their highest point of the year thus far in April, suggesting that buyer confidence seemed to be increasing.

But according to head Charlie Bryant, last week's inflation data had raised some concern.

"What we've observed over the past few months is that rates will be within most purchasers' reach if they stabilise around a level of 4–4.5%. If you examine the rates that were implemented soon after the mini-budget at the back end of last year, we saw those rates increase to 5–5.5%, which brought about those quicker drops in housing prices.

"We do need to see what happens following the inflation data at the beginning of last week, which saw swap rates increase," he continued. "This may lead mortgage lenders to push rates up a little bit and that may have more of an impact again."

(Sources: bbcnews.co.uk, moneyfactsgroup.co.uk)