Capital Economics estimates the Office for Budget Responsibility will give the Chancellor headroom of £73bn to increase borrowing. Alex Kerr, of the think tank, said: “While we doubt that she will use all that headroom, raising borrowing will increase demand and may lead investors to conclude that interest rates won’t be cut as far as otherwise.” Lenders typically price in fiscal policy announcements, such as changes to the Bank of England base rate, when deciding their own rates. A senior banking source said borrowers may have already baked in price rises during the months of speculation in the runup to Labour’s first Budget in 14 years. Mr Kerr said any changes to mortgage rates would depend on “how much of a loosening in fiscal policy investors have already priced in”. He added: “But the risk is certainly that mortgage rates rise after the Budget. In any case, the latest swap rates suggest that there is scope for some mortgage rates to rise a bit anyway.”