The Bank of England has announced its latest change in base rate, which is used by most lenders to determine interest rates on mortgages and other borrowing.

The increase is a larger-than-expected 0.5 per cent taking base rate to 5.0 per cent.

Most commentators had predicted a 0.25 per cent rise.

Today’s is the 13th successive rise by the Bank’s monetary policy committee, and follows yesterday surprise news that the Consumer Prices Index inflation rate was unchanged in May at 8.7 per cent.

Many analysts say it’s now almost certain that the committee will raise rates further over the rest of 2023 at least.

It comes as concerns have mounted over the mortgage market, with the average two-year fixed residential mortgage rate surpassing 6.0 per cent according to Moneyfactscompare, an independent mortgage monitor. 

Chancellor Jeremy Hunt is meeting bank and building society chief executives tomorrow to consider what additional help they can give to struggling borrowers. 

However he has already ruled out reinstating any tax break that would cut monthly payments, saying: “Those kind of schemes, which involve injecting large amounts of cash into the economy, would be inflationary.”

Meanwhile Labour says borrowers should be allowed to switch to interest-only payments for a temporary period to ease the crisis. Although some lenders are suggesting this to struggling customers, Labour wants it enforced.