The Bank of England’s Monetary Policy Committee has voted by a majority of 8-1 to increase the Bank Rate from 0.1% to 0.25%.

The timing of the move during the Omicron crisis is surprising, despite the recent leap in inflation, from 3.1% in September to 5.1% in November.

The Bank of England noted it expects inflation to remain ‘around 5% through the majority of the winter period, and to peak at around 6% in April 2022’, before falling back in the second half of 2022.

What does the rate rise mean for borrowers?

Those on fixed rates – roughly three-quarters of all existing borrowers – will see no change to their monthly repayments.

Variable rate mortgages could go up at the lender’s discretion and those on tracker rates will likely see a 0.15 percentage point rise in their payrate within a month or two.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Borrowers sitting on their standard variable rate (SVR) may see their rate rise within a month or perhaps within the next three months, depending on their lender.

“The difference between the average two-year fixed mortgage rate and SVR stands at 2.06%, and the cost savings to switch from 4.40% to 2.34% is a difference of £5,250 over two years approximately, based on a £200,000 25-year repayment mortgage.

“A rise of 0.15% on the current SVR of 4.40% would add £408 approximately onto monthly repayments over two years.”

What about new deals?

For those looking for a first mortgage or a new deal, rates could rise, although many lenders had already factored in a rise a month ago, and increased their new mortgage rates then.

But it’s still safe to say that today’s mortgage deals are looking really competitive and are not likely to be beaten anytime soon.

Brian Murphy, head of lending at Mortgage Advice Bureau, explained: “The sooner consumers act, the more likely they will be to secure a rate close to the lowest ever levels. For most people a remortgage is a fairly straightforward process and certainly not something to be scared of.

“Likewise, for those nearing the end of their current fixed rate mortgage deal or who are considering new borrowing, it may pay to contact a broker or lender to start the process sooner rather than later in order to secure a competitive deal.”