The rate has risen by a quarter of a percent, taking it from 0.5% to 0.75% and its highest level since March 2009.
Experts believe the rate change will see the cost of more than three-and-a-half million residential mortgages rise.
Those with fixed rate deals will be able to relax as their rate will be unable to change until their fixed rate period ends. For homeowners with variable or tracker rate mortgages though, their monthly mortgage repayments could increase.
Savers are likely to welcome the change, as the amount of interest they earn through their bank accounts could rise in the coming months.
However, a Bank rate rise doesn’t guarantee that savers will see the same increase in the amount of interest they earn. Following the last interest rate rise in November, half of savings accounts failed to change their saving rates to reflect the Bank of England’s decision.
Current accounts are widely outperforming savings accounts in terms of interest. In fact, no easy access savings accounts offered by high street banks currently pay interest of more than 0.5%.
It was initially predicted that the Bank’s Monetary Policy Committee would increase interest rates again back in May, but this was postponed due to a weak patch in the economy earlier in the year.
The Bank warns that further interest rate rises may occur in the coming months, but it intends to do these gradually.
