After the Office for National Statistics said the economy contracted unexpectedly between July and September, expectations for rate rises were scaled back,  killing hopes of an end to the recession. According to the same sources gross domestic product fell 0.4%, against expectations of a 0.2% rise.

The Centre for Economics and Business Research, an independent consultancy, predicted that Bank rate could stay at its record low of 0.5% until at least 2011 and remain at less than 2% until 2014.

In its latest meeting The Bank of England’s Monetary Policy Committee voted unanimously against extending the quantitative easing programme, which has pumped £175 billion into the economy to boost growth. The decision prompted speculation about earlier rate rises.

David Page, an economist at Investec Securities predicts a 0.25 point rise at the start of 2010 with rates hitting 2.5% by the year-end, because of rising inflation.

However, the most likely scenarios are: “slow and steady” rate rising; “fast then flat”; and “fast and high”.

In “slow and steady” scenario, Bank rate starts to rise next July (with mortgage rates going up the following month) and climbs steadily thereafter, increasing 0.25 percentage points every three months until 2014, when it hits 4.75%. While borrowers would be paying a higher rate than the fix by the end, the tracker would do better over the five-year term spending less in the early part of the term.

Cheapest alternative is tracker, but, there is the benefit of an alternative , allowing borrowers to take advantage of better deals without penalty .

In the second scenario, Bank rate rises faster — by 0.25% a month from July 2010. With inflation taking off and the Bank of England trying to deliver a sharp shock to control it, this would be most likely.

Borrowers would have paid less in the early years, after which, the fix would be cheapest.

In the “fast and high” rising, bank rate is held until July 2010 and then rises 0.25 points every second month to hit 7%. The tracker would reach 9.24% by the end of the term and the SVR would rise to 10.5%

Expecting rates to rise faster, would be better off fixing now , but you will have to accept much higher repayments for the first few years.

What fixed-rate deals would be on market is a difficult prediction.