The Bank of England treked rates of interest for the 11th time in a row, to 4.25% from 4%.
The increase suggests loaning in the form of whatever from charge card to home loans and business loans is now more costly.
But the Bank likewise said it anticipates the UK economy to grow a little in between April and June, modifying a previous projection that gdp (GDP) would stop by 0.4%.
Dr Esmond Birnie, senior financial expert Ulster University Business School, said the Monetary Policy Committee (MPC) had “probably” made the best choice, regardless of current turbulence in the banking system triggering speculation it might leave the rate the same.
There were other reasons that it was the best relocation, he said.
“The US Federal Reserve had just increased its rate, also by 0.25%. Worries about avoiding a slide in the value of the pound compared to the dollar tend to imply UK interest rates track those in the USA.”
News that Consumer Price Inflation (CPI) had actually all of a sudden increased in February, reaching 10.4%, likewise made it the right choice.
But he said the news still brought pain for home mortgage payers, “particularly those on flexible rate mortgages or those re-negotiating a rate”.
“The monthly payment for a typical tracker mortgage in Northern Ireland could increase by about £15. The monthly payment on a typical standard variable rate could increase by about £10.”
Michael McCord, a reader in real estate at Ulster University, described the rise as “unfortunately necessary” as inflation has not declined as anticipated.
But he forecast that it would be the last of the series of rises “as the Bank tries to delicately balance the economy and any associated impact upon the banking sector, mortgage market and housing market”.
“The housing market has defied expectations throughout the current cost of living and mortgage interest rate rises.
“However, it is slowing in terms of enquiries and price growth. The interest rate rises will more than likely have been priced into borrowing costs by lenders who more than likely expected the latest increase.
“The increase will however continue to impact upon purchaser affordability and first-time buyers and ongoing repayment affordability for those who have their current fixed or variable deals ending.”
Mark Crawford, director with mortgage advice firm Crawford Mulholland Financial, said he didn’t anticipate any instant boost in fixed-rate deals.
“Lenders will have already priced this rate increase into their existing fixed-rate product offering so I don’t expect that there will be any increases in mortgage rates in the short-term.
“In fact, we are seeing mortgage rates continuing to fall on a weekly basis.”
However, Rachel Springall, financing specialist at Moneyfactscompare.co.uk, said: “A rise to base rate will come as disappointing news to borrowers who are not locked into a fixed-rate mortgage, as their monthly repayments may rise in the coming months amid a cost-of-living crisis.
“Those borrowers who wish to refinance might be pleased to see that fixed rate mortgages have fallen since the tail end of 2022, and that it is currently cheaper on average to lock into a five-year fixed-rate over a two-year fixed deal.”