On 2nd August 2018 the Bank of England announced an increase in the interest rate by a quarter of one percent, from 0.5% to 0.75%. This increases the cost of borrowing to the highest level since March 2009.

This increase in the interest rate will be bad news for around three and a half million residential mortgage holders in the UK. As an example, for a variable mortgage of £150,000 at the interest rate of 0.75%, the increase in the annual cost will be approximately £224.

The rise in the interest rate was expected back in May this year, but the Bank's Monetary Policy Committee decided to postpone it, as the country's economy was at a weaker level, partly because of severe weather conditions and heavy snowfall triggered by the "beast from the east".