The Bank of England's Monetary Policy Committee has given holders of tracker mortgages a sharp shock today with the announcement that the interest rate is to go up to 4.75 per cent.
Industry analysts and consumers alike have been taken by surprise by the move. A rise of 0.25 points was widely expected to happen in the near future but few had foreseen it happening so soon.
"We were expecting a rate rise before the end of the year, but we are quite surprised that the MPC has raised the rate in August," said Rachel Blackmore, spokesperson for the Building Societies Association.
Observers believe the move should be seen as a pre-emptive course of action as opposed to a sign of a developing trend in the coming months and Ms Blackmore was quick to confirm that another rate rise in the near future was "unlikely".
Ms Blackmore also said that the rate rise would undoubtedly have an effect on the mortgage market, adding that she hoped it would make consumers more aware of the debts they take on board.
"We have warned that even though there is great optimism in the market we would want to remind potential borrowers not to over commit themselves," she concluded.To read more about mortgages, click here.
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