Inflation is expected to drop sharply in the April figures due out this week.

The Office for Budget Responsibility and Bank of England expect inflation to fall to 2% in the near future, mostly thanks to a cut in the energy price cap at the start of April. It’s currently £1,690 – compared to the energy price guarantee of £2,500 a year earlier.

However, analysts say the Bank of England expects inflation to rise slightly in the second half of this year. In July, the higher energy prices of a year earlier will drop out of the figures (because the cap fell to £2,074 last July).

With regard to the housing market Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, says: “Inflation is likely to have taken a major step in the right direction in April. There’s good news in here for anyone on a variable rate mortgage or facing a remortgage from a low fixed rate. However, it may not be quite as good as you’re expecting.

“Fixed mortgage rates had been moving in the wrong direction for months. Moneyfacts figures show the average two-year fixed rate rose from 5.56% at the end of January to 5.93% earlier this month. 

“However, since the Bank of England emphasised that rate cuts might come sooner than some expect, they have backed off very slightly. The fall in inflation could keep fixed mortgage rates moving in the right direction, as banks price in an interest rate cut in June or August.

“However, remortgagers shouldn’t hold their breath for major cuts, because they’re not likely to shift spectacularly. 

“We’re still not expecting rate cuts to come thick and fast, so those remortgaging from a rate of under 2% are still set for a horrible hike in repayments. It’s why the HL Savings & Resilience Barometer shows that one in four mortgage holders are expected to be at risk of default by the end of the year. 

“For anyone on a variable rate mortgage, nothing will change until we actually get rate cuts, and the timing of those still hangs in the balance. If you moved to a variable rate at the start of the year in the hope that a rate cut was around the corner, it seems like you’ll have to suffer for at least a little longer on rates that are much higher than you expected.”