Interest rates rise by 0.25%

The Bank of England has raised interest rates by 0.25% to 4.75%.

The decision, which was made by members of the Bank’s Monetary Policy Committee, was announced shortly after noon. It marks the first hike in the base rate in 11 months.

While initial reports have hinted that there was a split among the experts regarding the necessity of the rate rise, the majority of members concluded that the increase in the cost of borrowing was needed to rein in inflation, which hit 2.5% in June.

David Newnes, managing director of residential agents Your Move, said: ‘The market over the last six months has been healthy and steady, this week’s rate hike is totally unnecessary. There is now a risk of the housing market slowing down, which is surely not what the Bank of England intended. The reality is that property remains a very good long term investment and we need first time buyers to be able to come to the market with confidence, not worried about what will happen round the corner to interest rates.’

Stuart Law, managing director of Assetz, added: ‘It is disappointing the MPC has raised rates again. As a country we have already moved rates upwards in a timely manner in response to perceived inflationary pressures and other economic indicators. This new rise is surely just a minor adjustment in a steady environment and we expect the next move to be down in due course.’