Homeowners facing first interest rate rise in 10 years

● Mortgage payments and unsecured lending costs rise – but savers will benefit

to finally pull the monetary policy trigger on Thursday, taking interest rates up from 0.25 per cent to 0.5 per cent. But the case for a rate hike is far from overwhelming and we suspect there will be a split within the [Bank’s] monetary policy committee (MPC).

“Assuming that the Bank of England does raise interest rates, we do not expect the MPC to act again until at least the fourth quarter of 2018. Given that interest rates have not risen since 2007, the MPC may well sit tight for an extended period after an initial hike to see how consumers and businesses respond. Meanwhile, moderating inflation, ongoing lacklustre UK growth and persistent Brexit uncertainties are expected to limit the case for a further rate hike.”

Laith Khalaf, senior analyst at financial services firm Hargreaves Lansdown, said: “We estimate that eight million Britons haven’t seen an interest rate rise in their adult lives, so this would be a highly symbolic moment, even though a hike only takes us back to the ‘emergency’ rate of 0.5 per cent.

“Savers, borrowers… and markets will ultimately need to adapt to an environment of tightening monetary policy. However the pace of rate rises will be slow and steady, so any adjustment is going to be a gradual evolution rather than a sudden revolution.”