The Bank of England’s Monetary Policy Committee has hiked its Base Rate by 0.50 percentage points, from 1.75% to 2.25% – the highest single increase in 33 years.

The group of economic experts that decides rates voted in favour of the half percentage point hike by 5 to 4. Of the four who didn’t vote for the change, three wanted to raise rates even further and one voted for a smaller rise.

What does it mean for you?

On a fixed rate: If you are on a fixed rate mortgage your rate won’t change until the end of your current deal.

At this point you will automatically move onto your lender’s standard variable rate – which will have already gone up significantly this year – unlesss you remortgage to a new deal.

Even if you do remortgage, rates on new deals are now significantly higher than they were 10 months ago, and likely higher than you’re currently paying.

Andrew Hagger, personal finance expert, Moneycomms.co.uk said: “Mortgage borrowers approaching their fixed rate renewal are in for a massive shock when they see the eyewatering increase in their monthly repayments.”

“Facing hundreds of pounds extra in mortgage repayments on top of soaring food, fuel and energy costs means some borrowers will face a serious monthly budget deficit.”

On a variable rate – including discounted variable rates, standard variable rates and trackers: If you are on a variable rate that goes up and down in line with wider interest rates, your pay rate is likely to go up within the next month, on top of previous increases you’ve already faced in 2022.

Your lender will contact you in the coming weeks with details of your new pay rate and monthly repayments.

How much could your mortgage rise by?

According to TotallyMoney, today’s rise could have a big impact on monthly mortgage repayments.

Those with a £150,000 mortgage on a variable rate could see monthly repayments increase by £37.

Borrowers with a £250,000 mortgage would see a £62 a month hike, while those with a £400,000 mortgage would see their repayments go up by £99.

Remember, this is on top of the six previous rate hikes since last December, taking the Base Rate from 0.1% to 2.25%.

The cumulative impact on monthly repayments is stark. The credit app said that those with a £150,000 mortgage on a variable rate have seen monthly repayments increase by £168 since last November.

Borrowers with a £250,000 mortgage have seen a total £280 a month hike, while those with a £400,000 mortgage have seen their repayments go up by £505 each month.

Alastair Douglas, CEO of TotallyMoney, said: “With inflation currently sitting at almost five times the Bank of England’s 2% target, it’s clear that something needs to be done — but is this the way? The latest interest rate hike is being closely followed by a new, higher energy price cap, further compounding pressure just as we head into the cold winter months.

“People’s finances are being squeezed more than ever and the government, regulators, lenders and fintechs need to act quickly to protect people from being pushed to the edge as they risk missing repayments and potentially losing their homes.”

Aman Aneja, mortgage expert at AA Mortgage Services, added: “This latest rate increase is intended to kerb rising inflation, but it will be damaging many homeowners with a mortgage, unless they’re on a fixed rate.

“We have seen rates rise several times with some as often as every few weeks recently. People with mortgages and loans have had it good for a decade and a half and have got used to low rates and it has become the norm. For many younger people who are in their 20s, 30s and 40s and have mortgages, this will be more of a shock as they’ve probably never experienced such high rates.”