EIGHT weeks after the base rate hit a mind-boggling 0.5 per cent, last week’s decision by the Bank of England’s Monetary Policy Committee (MPC) to leave rates unchanged hardens the consensus that mortgage rates will go one way from here – up.

On the way down, tracker loans were a smart move for borrowers, shrinking monthly repayments close to zero in some cases.

As a new order takes shape, fixed-rate loans look a good defensive move for borrowers who fear rates, when they rise again, could stay high for some time.

Among lenders, there’s a spring “nip” in the air, a sense that the worst is behind us.

Gloom began to lift in mid- April when our biggest lender, Halifax, offered to pay up to £1,000 of a homebuyer’s council tax for a year to any borrower taking a mortgage with a deposit of at least ten per cent.

Are lenders actually keen to find new customers with house prices still falling, possibly by eight to ten per cent for the rest of this year?

Plainly they are, because rivals have followed Halifax’s lead.

Woolwich, the lending arm of Barclays, has cut rates on two, three, four and five-year fixes, starting at 3.69 per cent for two years – to maximum Loan to Value (LTV) – of 70 per cent.

Woolwich also has a lifetime tracker, on loans of £200,000-plus, at base rate plus 1.99 per cent – although maximum LTV is a meagre 60 per cent.

Three-year fixes at 3.99 per cent from Royal Bank of Scotland and HSBC, both to maximum 75 per cent LTV, charge fees of £499 and £599 respectively.

For remortgagers (maximum LTV 75 per cent), Abbey reckons its three-year fix at 4.09 per cent, seven-year at 4.99 per cent and 15-year at 5.38 per cent, are its lowest in a decade.

Abbey’s Nici Auchlam-Gardiner says its research shows that for remortgagers, a third are looking for a tracker, and of these, over half will choose a two-year tracker: “With a best buy rate of base rate plus 2.45 per cent, borrowers should also seriously consider the two-year tracker.”

Andrew Hagger, at Moneynet.co.uk, is not so sure.

“There is a feeling trackers won’t look so good once rates move up again.

New trackers at about 2.5 per cent over base mean a rate of 5.5 per cent if base rate gets back to three per cent,”

he said.

And trackers often have early repayment charges lurking in the small print, expensive when borrowers get another loan.

“Fee free” deals are back in fashion too. Yorkshire Bank offers remortgages with no arrangement fees on fixed rate, offset and current account loans.

But Mr Hagger said “fee free” is not always cheapest.

“On a £150,000 loan over 25 years (75 per cent LTV), for instance, an HSBC fix at 3.99 per cent with a £599 fee costs £1,570 less over three years than Alliance & Leicester’s fee free loan at 4.69 per cent,” he said. Perhaps the most encouraging sign that mortgage markets are easing is HSBC’s £1bn offered as 90 per cent LTV loans – a two-year fix at 4.99 per cent (fee £1,499), a twoyear fix at 5.49 per cent (fee £199) and a lifetime tracker at 4.09 per cent plus base rate (currently 4.59 per cent) with non-refundable fee of £999.

To qualify, HSBC borrowers must open a current account, which charges a monthly fee, and with access to current account details, the bank could make further efforts to sell financial products.

HSBC, with its first direct subsidiary, could take 13 per cent of this year’s mortgage market – against three per cent in 2007. It isn’t saddled with unprofitable mortgages hitting rival lenders who grabbed the share before boom turned to bust.

Ray Boulger, at brokers John Charcol, says households should focus on two strategies. Firstly, money saved on low mortgage rates should go to pay outstanding debt on mortgages, credit cards, and other loans. Don’t splurge on luxuries and holidays.

Secondly, rates will be higher than they are today, so borrowers should be in a position to absorb them with comfort.