For the first time in more than 10 years the Bank of England has raised interest rates.
The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007.
The move reverses the cut in August of last year – made in the wake of the vote to leave the European Union.
Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns.
As well as many of the country’s 45 million savers, anyone considering buying an annuity for their pension will also see better deals.
The main losers will be households with a variable rate mortgage.
Of the 8.1 million households with a mortgage, 3.7 million, or 46%, are on either a standard variable rate or a tracker rate.
According to UK Finance, the average outstanding balance is £89,000 which would see payments increase by between £11 and £12 a month.
The Bank estimates that almost two million mortgage holders have not experienced an interest rate rise since taking out a mortgage.
The Nationwide Building Society have already notified us that they are implementing the rise for all of their customers on tracker rate mortgages with immediate effect and those on variable rates will see theirs rise from 3.74% to 3.99% on 1st December 2017. Of course this will mean any existing borrowers with tracker and varible rate mortgages with all other lenders will also experience the same increases. We expect new fixed rate mortgages to follow the same trend at a slightly later date after the markets have adjusted to this unpleasant news.
We are uniquely placed at Westexe Mortgages to source the best possible re-mortgage rates available, with current 2 year fixed rates starting from 1.25% and 5 year fixed rates starting from 1.79%.