The decision by the Monetary Policy Committee was no real surprise - the rise places the Base Rate at its highest level for five years (August 2001 was the last time that interest rates were at five per cent).

114x114_fitbox-bricks1.jpegThe Bank of England explains: "The UK economy has recorded its fourth consecutive quarter of firm growth. Household spending has been volatile, but the underlying picture appears to be one of moderate expansion. The recovery in business investment has been maintained.

"...the Committee judged that an increase in Bank Rate of 0.25 percentage points to 5.0 per cent was necessary to bring CPI inflation back to the target in the medium term." 

Industry says: 

"The modest rise in interest rates will help to cool the housing market but at the same time promote wider economic stability and prevent inflation pressures building," Milan Khatri, chief economist at the Royal Institute of Chartered Surveyors.


"This year has seen record levels of mortgage lending - almost on a monthly basis - and modest increases in mortgage costs will help to maintain a sustainable environment.

"Borrowers should be factoring in to their finances the effects of at least one more rate rise, and making sure that they are shielded from any risks this situation might bring." Director General of the Council of Mortgage Lenders, Michael Coogan


"The national picture for the residential property market appears to be extremely strong and buoyant. The high prices and high pace of activity that is being reported particularly in the South East is not reflective of all areas, with some agents reporting a relatively flat market in their respective regions.

"This further rate rise could have a detrimental effect on these areas," Peter Bolton King, Chief Executive of the National Association of Estate Agents

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