The Bank of England has announced it is to hold interest rates at 5.5 per cent.

Most experts had predicated that the Bank would not make another cut so soon after last month''s 0.25 per cent reduction, with Stephen Leonard, director of mortgages at Alliance & Leicester, commenting that the decision "has not come as a shock".

While he argued that tracker mortgages are looking like a "good option" for those who feel confident that they would be able to meet any increased payments should interests rise again, he recommended that would-be-homeowners look at fixed-rate deals.

"First-time buyers looking for a mortgage deal should consider taking out a fixed-rate mortgage which will give them the security of fixed monthly payments," he said.

Nici Audhlam-Gardiner, head of Abbey Mortgages, predicted that fixed-rate products are "likely to continue to be the preferred option for more cautious borrowers until a downward trend in base rate is seen".

"There are some excellent fixed rate deals to be had in the market," she added.

Ms Audhlam-Gardiner said that it is "probable" that the Bank will cut interest rate next month if the economy does not show any sign of improvement.