Mortgage borrowers who had been holding out for more affordable rates had their hopes dashed last week, as disappointing economic data raised the likelihood of borrowing costs staying higher for longer. A drop in the annual rate of inflation to 3.2% in March fell only just short of City expectations for a drop to 3.1%, but that was enough to prompt investors to trim their bets on an imminent cut to interest rates. Financial markets, which had until recently been pricing in a first interest rate cut by the Bank of England in June, are now forecasting that the first reduction may not come until September or November. That could prove too late for many of the 1.6 million mortgage borrowers who, according to the industry association UK Finance, are due to roll off cheaper fixed-rate mortgages and on to higher rates this year. “They will face a rate shock,” said Charles Roe, UK Finance’s director of mortgages. Households whose monthly payments were priced against sub-1% interest rates just a few years ago will be facing higher payments linked to the current 5.25% base rate. And that will leave many borrowers with a choice: fix now, or take a gamble...