The Bank of England has raised interest rates from the historic low of 0.1% to 0.25%.
The move had long been expected in the face of runaway inflation and marks the first increase since August 2018.
The Monetary Policy Committee (MPC), which set the rate, voted 8-1 in favour of the rise.
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.”
Lisa Martin, development director, TMA, added: “Pressure has been mounting to tackle rising inflation which is now predicted to reach 5.5% in 2022 – a 30-year high – so it’s not surprising that the Bank of England has today decided to raise the base rate.
“For many borrowers though, this rise may not have an immediate impact as most are on fixed-rate mortgages. And while the prospect of a rate hike has already pushed some high-street lenders to raise mortgage rates, the market does remain extremely competitive with overall rates still below March 2020 levels.
“There is now a great opportunity for brokers to support remortgaging borrowers in this new climate by helping them to find one of the great deals that are still available at this time. For those with complex financial situations, seeking advice is also more important than ever, and brokers should act now to help their customers lock into appropriate, affordable products while they can.”
