The Bank Of England's Monetary Policy Committee (MPC) has taken the decision to increase the Bank of England Base Rate to 5.75 per cent.

Mark Leaper, at Moneymatchmaker.com said.

“The bank's decision to increase the base rate by another quarter point this month will come as a surprise to the city analysts and consumers. Inflationary pressure is higher than desired and reports last week have shown a marked increase in house prices compared to the previous month. Analysts are predicting that there will be another rise before the end of the year and consumers are being continually made aware of the ever upward trend of interest rates.

“However, while a further rate rise may come as no surprise to many mortgage borrowers, it is making the alarm bells ring. The bank base rate has now reached a potential tipping point and this month’s rate rise may indeed be the final straw for some mortgage borrowers.

“Although demand will continue to outstrip supply in several areas of the country, house prices continue to creep ever higher and many first time buyers and novice landlords will begin to feel the bite of another rate increase. An increasing number of first time buyers will start to find it almost impossible to reach their dream of owning a property and rental incomes will come under further pressure to support mortgage repayments. As this bottom rung of the market is removed the knock on effect will then be felt by sellers further up the line and could in turn prove potentially detrimental for the market as a whole.”

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