The Bank of England’s Monetary Policy Committee (MPC) has voted to raise the official Bank Rate by 0.5 percentage points to 5.0%.

It means the bank has now increased rates 13 times in a row.

The MPC voted by a majority of 7–2 to increase the Bank Rate by 0.5 percentage points, to 5%. Two members preferred to maintain Bank Rate at 4.5%.

The hike was seem as inevitable by the markets, especially following the news yesterday that inflation failed to fall as hoped in May.

Paul Shearman, mortgage proposition director at The Openwork Partnership, said: “Today the Bank of England has announced another painful 0.5% rate hike on borrowers. With 2-year fixed rate mortgages priced at over 6%, much of today’s increase has already been priced in by lenders, but the messaging from the MPC indicates there may still be further to go.

An estimated 1.8 million borrowers are reaching the end of their mortgage deals in 2023, with the biggest proportion in the last few months of this year. These borrowers will be facing a significant spike in monthly payments. My advice to these borrowers would be not to wait until the last minute to secure a deal. Seek expert advice from mortgage broker now, as most lenders will enable products to be secured 4 to 6 months in advance.

Paul Oberschneider, CEO of residential lender Hilltop Credit Partners, added: “The BoE continues to get it very wrong. Raising the cost of money when growth is at virtually zero, and inflation is being caused by factors outside of consumption control, is a recipe for disaster.

“The focus should be on addressing the underlying causes of today’s inflation, including a lack of housing supply caused by a broken planning system and out of date mortgage products, and fiscal measures that don’t cause more consumer pain. The UK economy is precariously positioned, with real-term UK wages at 2005 levels and the impact of the government’s c. £400bn Covid bailout now finally catching up with the Treasury.”