BORROWERS could be better off with a fixed rate even though some economists think interest rates could fall to as low as 4.25% by the end of the year.
Lenders have hiked trackers to such an extent that they are now much higher than equivalent fixed rates, and Bank rate would have to fall by nearly a percentage point before you would be better off with some trackers.
So how much cheaper could a fix be?
First Direct has a fix at 4.75% with a fee of £1,498, although you must have a deposit of at least 20%.
This compares with the best two-year tracker from Britannia at 5.70% with a fee of £399 or the Coop at 5.49% with a fee of £999.
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Bank rate would have to fall by 0.75 points - three times - before you would be better off with the Coop deal, and nearly a full percentage point before it would be worth taking the Britannia deal.
How likely is it that rates will fall this much?
While some economists think interest rates could fall to 4.25% by the end of the year, the real likelihood of another rate cut will become clearer after the Bank of England's Monetary Policy Committee (MPC) minutes are published this week.
The minutes are expected to show that the latest vote was a close one as some members are still worried about the risk of inflation - thus interest rates may not come down as much as some people expect.
Will fixes get cheaper?
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Fixes are currently higher than they should be, with lenders reaping discounts on the wholesale markets that they are not passing on to borrowers. So brokers say there is room for lenders to reduce them if they want to increase their position in the best-buy tables.
Meanwhile, trackers look set to continue rising. For example, Abbey, the UK's second biggest bank, is expected to announce more increases to rates on tracker loans this week, while its five-year fixes will be cut by as much as 0.46%.
Can I hedge my bets?
Yes, some tracker deals allow you to switch to another deal at any time. These are referred to by brokers as "drop-lock" deals - that is, you drop the tracker and lock into a fix.
Charcol is launching an exclusive five-year tracker this week funded by Darlington building society at an initial rate of 5.64%, requiring a 20% deposit with a £524 upfront fee on a maximum loan of £500,000. The drop-lock option means borrowers can switch to any fixed rates Darlington is offering in future.