THE Bank of England has hiked interest rates to 0.5 per cent in the first rise for over a decade and signalled more increases are on the way.

The quarter point rise marks the first rates increase since July 2007 and comes as the Bank looks to dampen Brexit-fuelled inflation.

Millions of borrowers on variable rate deals will be impacted by the rates decision, which will add around £15 a month to the cost of the average mortgage, while it will offer some relief to savers hit by surging inflation and negligible returns.

Keith Brian, director of Chorley New Road-based Rivington Mortgages, said: “The climate of low interest rates has been with us for about 10 years.

“It was inevitable that the rates would rise again at some point and people have had to be prudent to build that into their budgets.

“A quarter of a per cent rise itself should not make a massive difference to people. But it looks like there will be further rises happening in the future.

“It is crucial that customers don’t overspend and are aware that rates will continue to rise.”

Experts estimate that eight million Britons have never seen interest rates rise in their adult lives, with borrowing costs having languished at rock-bottom lows since the financial crisis.

There are fears over the timing of the cut, given the uncertainty amid Brexit negotiations and as Britons are being squeezed by paltry wage growth and rising inflation.

Christian Spence, Head of Research and Policy at Greater Manchester Chamber of Commerce said: “Today’s rise, the first in ten years, was not unexpected. The Committee hinted strongly in its previous meeting that a rise was likely this time.

"Whilst the increase is, as expected, small, and its effects on the economy overall will be small, it sends a strong reminder to consumers and businesses that interest rates can indeed increase. 

“Whilst spreads on commercial and personal loans remain low, there will be little direct negative impact from this move, but it may cause some to reconsider the likely forward path of rates over the coming years.

"With the UK economy slowing over the past year to growth of 1.5 per cent, a rise may feel unusual, particularly when in our judgement inflation will rise little further from its current level.

“This move is not without its risks, particularly with the current levels of uncertainty in the UK economy for both domestic reasons and with the ongoing Brexit negotiations.

"We reiterate our call to government to move rapidly to provide certainty to UK businesses across the country of their proposed policies for the coming years, and they must use the November budget to support business growth and confidence for the future.”