The Bank of England’s nine-strong Monetary Policy Committee (MPC) has taken the decision to increase interest rates from 0.25% to 0.5%, the first back-to-back rises since 2004.
The MPC voted 5-4 in favour of the increase. It also voted unanimously to begin to reduce the amount of quantitative easing.
It increased rates in December from 0.1% to 0.25% having said at the time it could no longer ignore inflation.
At that stage there was still a great deal of uncertainty about the full potential impact of the Omicron Covid variant.
Brits have been facing an ongoing cost of living squeeze of late with rising energy costs, supply problems and higher shipping costs all contributing to the increase in inflation.
The lates ONS data shows that inflation currently stands at a 30-year high of 5.4% – well above the Bank of England’s 2% target.
To further combat this it is expected that the Bank of England will increase the rate to 1% by the summer and 1.25% by the end of 2022.
Steve Seal, CEO, Bluestone Mortgages, said: “As inflationary pressures continue to mount, the Bank of England’s decision to continue its trajectory of increasing rates is hardly surprising. In the current climate of rising costs of everyday items and household bills, affordability will continue to be the main issue faced by consumers.”
“While this rate rise will undoubtedly impact mortgage repayments, there are steps would-be and existing borrowers can take, whether that be locking in a fixed rate mortgage or remortgaging.
“And, for those who may find themselves in a more challenging financial situation, it’s important to remember that there are lenders out there who can cater to their borrowing needs and help them climb onto or up the property ladder.”
