Analysts are suggesting that interest rates may have peaked at their current level of 5.75 per cent, bringing relief to many fixed-rate mortgage borrowers who are already facing costly remortgaging packages this autumn.

The Bank of England's base rate has seen five price hikes over the past year, but uncertainty in global credit markets and under-target inflation figures for the summer are expected to stay the Monetary Policy Committee's hand when it convenes this Thursday.

A slowing housing market caused by high mortgage repayments will also likely prompt restraint by the Bank, which will want to avoid placing any greater financial burden on prospective homeowners.

Before last month's crisis in the word's financial markets many analysts had expected a further rate rise was in the offing, but Global Insight chief UK and European economist Howard Archer says that has all changed.

"Interest rates currently seem highly likely to stay at 5.75 per cent until at least November and there is an increasing probability that they will remain unchanged well beyond then," he advised.

Not everyone is convinced though, with Capital Economics suggesting that one further rise will be necessary to offset looming inflation concerns.

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Author:  Joanne McCabe

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