The Bank of England has increased the base rate by 25 basis points to 5.25 per cent. It is the Bank’s 14th consecutive rise and comes on the back of better-than-expected consumer price inflation (CPI) in June, which fell to 7.9 per cent.

Six members of the nine-strong Monetary Policy Committee voted for a 0.25 percentage points rise, while two members preferred a 0.5 percentage points increase and one voted to maintain bank rate at 5 per cent.

Fixed rates are influenced by future base-rate movements and therefore not directly linked to what is decided this week. Lenders have already priced this increase into their fixed rates so we don’t expect pricing to rise. Indeed, a number of lenders have reduced fixed rates in the past few days on the back of calmer Swaps, which underpin the pricing of fixed-rate mortgages. The extreme volatility we have seen in Swaps over the past few weeks has settled following the recent inflation data.

Those with a base-rate tracker will see their mortgage rate increase by 25 basis points. A borrower with a £250,000 repayment mortgage on a 25-year term and a current pay rate of 4.5 per cent will see their monthly payments rise from £1,390 to £1,425.

The cumulation of 14 successive rate rises is significant. A borrower with a £250,000 mortgage on a tracker pegged at 1 per cent over base rate will have seen their monthly payments rise from £943 in December 2021, when base rate rose from 0.1 per cent to 0.25 per cent, to £1,649 today.

While other lenders may follow suit and reduce their fixed rates in coming weeks, long gone are the days of rock-bottom pricing. Borrowers due to come off cheap fixes face a real payment shock, so it is important to plan ahead as much as possible and act now. Rates can be booked up to six months before borrowers need them so they should speak to a whole-of-market broker, such as SPF Private Clients, to find out what’s available. If when they come to remortgage rates are cheaper, borrowers can choose another deal.