Stand-off over fixed-rate mortgage deals

The rates on five-year mortgage deals are set to fall soon, according to one of the country's leading mortgage broking firms.

Charcol said that recent forecasts that a rise in interest rates was on the cards had proven to be groundless. The Bank of England chose last week to keep interest rates on hold at 0.5 per cent.

"The City has belatedly recognised that there are far too many problems in the economy for the monetary policy committee to increase the bank rate in the next few months, and for the second time in as many months the majority of economists have yet again put back by a further three months their expectation as to when bank rate will increase," said Ray Boulger, the technical director of Charcol.

"November now appears to be the majority view, but with an increasing number acknowledging the year may well end with bank rate still at 0.5 per cent."

However, Mr Boulger added that despite the low bank rate, lenders were still holding five-year fixed rate mortgage deals at a high level. "There has been little or no reduction over the past month in the rates, and so borrowers should go on a buyers' strike until lenders cut rates sufficiently to reflect the changed mood in the market," he said.

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