Three ways the interest rate rise could affect you
Job, loans and savings are all affected by the rise in interest rates announced by the Bank of England.
By BBC News
The Bank of England has raised its interest rate from 3.75% to 4%, affecting borrowing costs, savings returns, jobs and pay.
The increase is intended to encourage people to spend less, which can help reduce demand for goods and services and limit price rises.
However, businesses may also face weaker sales as households have less disposable income. Companies with variable-rate loans will see their borrowing costs rise, potentially making it harder to invest, create jobs or increase wages.
Higher rates can benefit people with savings. Interest rates on savings accounts are influenced by the Bank rate, so those putting money aside for a large purchase such as a holiday or home may receive more interest.
Experts advise savers to compare accounts and check whether their money is held in an older product with less competitive rates. Renters could face higher costs if landlords pass on increased borrowing expenses.
The biggest immediate impact is likely to be felt by people with variable-rate mortgages and loans. About 500,000 homeowners have mortgages linked directly to the Bank of England rate.
For a typical tracker mortgage, repayments are expected to rise by about £31 a month following the latest increase, although the exact amount depends on the size of the loan.
A further 500,000 homeowners have standard variable-rate mortgages. If lenders pass on the full 0.25 percentage-point increase, repayments could rise by about £14 a month.
Borrowers with fixed-rate mortgages will not see their monthly payments change until their current deal ends. Around 87% of mortgage holders are on fixed-rate agreements, typically lasting between two and five years.