Banks and lenders are likely to face increasing pressure to cut fixed mortgage rates after a sharp rise in the government bond markets. Bond market analysts say the rise in government bond prices, which have an inverse relationship with yields, ought to lead to lower mortgage rates on the high street.

Mortgage brokers warned that banks and lenders might be reluctant to pass on lower borrowing costs, which are caused by lower swap rates, because they want to bolster their profit margins. Swap rates are used to set fixed-rate mortgages, which account for about half of the market. Swap rates have fallen in line with government bond yields.