The Bank of England’s Monetary Policy Committee (MPC) has voted to raise that Bank Rate from 0.1% to 0.25%.
The MPC voted by a majority of 8-1 to increase Bank Rate by 0.15 percentage points, to 0.25%.
Market analysts were confident of a rise last month but when this did not materialise, there has been less expectation of a rise this month. However, official figures published yesterday showed that inflation hit 5.1% in November, with the government’s inflation target for the central bank is 2.0%.
Kevin Roberts, director, Legal & General Mortgage Club, said: “Whilst last month a rise was expected, consensus appeared to be for the status quo this month, therefore this decision once again comes as a surprise. It would appear the need to tackle rising inflation outweighs the many other factors currently at play. However, it’s important to put any rise in context: this is an increase from a historic low and will primarily help to give the central bank the option to reduce rates again, should it need to inject more life into the economy next year.
“While base rate changes will naturally impact mortgage prices, homeowners can rest assured that these rates are rising from a low base and competition among providers will help to ensure any price increases are modest. For homeowners wanting to protect against rate rises, along with those simply coming to the end of their existing mortgage term, the key now is to seek independent advice. Mortgage advisers are on hand to help their clients secure the best possible mortgage for their individual needs.”
