Economic gloom made rate freeze obvious but oil still lingers like a bad smell

"Subdued economic figures released over the last month meant that this freeze was already a foregone conclusion. These figures, combined with the announcement that the general election will take place on 5th May, meant that even the growing support for a rise amongst some members of the MPC was always going to be overlooked this month.

"The economic figures continue to highlight uncertainty. Slightly weak retail sales figures and the news that house prices fell by 0.6% in March, according to Nationwide, and rose 0.5% according to Halifax, has done little to prompt an immediate reaction from the Committee. In fact, the only trend we can be certain of at present is the growing vogue for inconclusive figures. The one real piece of news that may precipitate a rise in the coming months is that oil prices reached an unprecedented level earlier in the week. Coming in just shy of $60 a barrel, its increasing cost may send ripples through many economies across the globe.

"Nevertheless, one does need to bear in mind that because oil is priced in dollars, and the dollar is low against the pound and the Euro, the effect of the oil price increase is less dramatic for the UK than the US. That said, Greenspan’s comments this week suggesting oil prices are near a peak pushed prices down by almost a dollar. This yet again demonstrated how volatile and unpredictable the oil market is, with significant price changes resulting from influential comment at least as often as actual demand and supply."

What should borrowers do now?

Boulger continues, "Most of the half a million or so borrowers who are likely to be coming to the end of a fantastic 2-year fixed rate taken in 2003 will have to pay significantly more each month for their mortgage.

Fixed rates have edged up further recently and are currently priced some 1.5% higher than their June 2003 counterparts. Of course, if borrowers need the security that a fixed rate brings then they should re-fix, or take a capped rate, even at a higher rate. Our advice is, if you can, to look at some of the tracker and discount rate deals available and, in particular, those which offer an option to drop lock into a fixed rate. This allows borrowers to transfer to a fixed rate at any time for any purpose.

"For those who do not need this security, there are still some excellent trackers on the market. Another option could be to take a market leading Charcol exclusive discount mortgage that has a 6-month discount, no arrangement fee, no redemption penalties at all, and on remortgages also a free valuation and free legals. This very low-cost product provides the best of both worlds. It allows borrowers 6 months grace to see where interest rates will go before opting for a longer deal and also provides the ability to move to another loan at any time."

Please see table below for product suggestions. Rates frequently change and so if you wish to quote any deals mentioned on the table please feel free to check with the press office to see if they are still available.

Borrowers keen to see how much they could save on their mortgage repayments should either contact Charcol on 0800 71 81 91 or post a copy of their existing mortgage offer marked clearly "Remortgage Check" to Charcol, Holbrook House, 10-12 Great Queen St, London, WC2B 5DD. This service is obligation free and consumers are in no way required to act upon the recommendations given.