"The Bank of England has fulfilled most analysts' expectations of another rise as it tries to take the heat out of the housing market. This will leave the average household - with a repayment mortgage - £14 month worse off. Those with interest only mortgages will be £21 a month worse off."
He continued: "As an incremental rise, this is pretty insignificant and most households will be able to take on the additional cost.
"But today's rise means households are now £70 worse off than they were in November when the Bank started raising rates, and that is a more substantial hit on the borrower's pocket. On that basis, among those who are impacted by base rate rises - particularly those on lender's standard rate products - we should see some of the cooling in activity that the Bank is looking for.
"However, recent campaigns by consumer groups, independent advisers and the Treasury to get consumers to switch to fixed-rate products has contributed to some 36% of households now not being affected by today's interest rate decision. The influence that a base rate change wields is much reduced as a result. This is a relatively new situation for the UK and it is difficult to predict what the effect will be.
"At the same time, there will be households that took on short-term fixed deals when rates were very low, between one and two years ago. The types of mortgage deals available to these borrowers coming to the end of their rate period are very different now compared to when they went into their short-term deals. Again, the impact of this scenario is largely untested. What is certain is that many households will experience a sudden hike in monthly repayments as new, short-term deals may be priced at far higher rates than those they are used to.
"There are now at least four base rate rises between the price of the best discount and the best fixed rate deals. We would suggest that unless a borrower has committed themselves to very high levels of borrowing, they should look at getting a discount deal as these now represent excellent value for money. The best fixed-rate is 4.79% through Northern Rock while the best discounted-rate is priced at 3.7% with West Bromwich Building Society for two years."
