The Bank of England has raised interest rates to their highest level since the financial crisis almost a decade ago.
The move will increase the interest costs of more than three-and-a-half million residential mortgages that have variable or tracker rates.
— Bank of England (@bankofengland) 2 August 2018
However, the move is likely to be welcomed by savers, who could see a lift in their interest rates over the coming months.
Mark Carney, the Bank of England’s governor, has said that even if the economy is growing only modestly, it risks overheating unless borrowing costs rise from their crisis-era emergency lows. With unemployment at its lowest rate in more than 40 years, the Bank thinks pay increases will continue to pick up, creating inflation pressure.
The bank has stressed that any increases will be gradual. It had looked ready to move in May but the monetary policy committee held off to see whether sluggish growth in the first quarter was weather related.