Following months of speculation over further rises, the November increase represented the first rise since August, when BBR moved from 4.50 per cent to 4.75 per cent. Interest rates are now at a five-year high.
Commenting on the MPC decision to increase the BBR by 0.25 per cent, Matthew Wyles, group development director at Portman Building Society, said: “This rate increase was a racing certainty and has already been factored into the pricing of most fixed rate mortgage products. It is clear that the MPC intends to ratchet rates upwards until our exuberant housing market loses some of its upwards momentum. The impact of this strategy on less resilient sectors of the economy will be considerable.”
Philip Davies, chief executive of Linden Homes, argued that most people had already factored in the expected base rate rise, but urged caution over the future of the market. He said: “The interest rate rise was widely expected and the majority of homeowners had already priced it in, so I do not expect it to have a significant impact on the housing market.
“A further rise in December or January, however, would have a detrimental effect on consumer confidence, so I await the minutes of today’s MPC meeting with anticipation to see how the committee members voted.”
Sean Gardner, chief executive at MoneyExpert.com, admitted his disappointment at the decision. “This is a bitter blow for homeowners in the run-up to Christmas and will cost around £15 a month for someone with an average mortgage of £90,000.
“Base Rates are now at their highest since September 2001, when the Bank cut rates to 4.75 per cent. Unfortunately now it looks like the next move could be up again.”
