The Building Society Association has urged consumers to keep their cool following the shock base rate rise.
Adrian Coles, director-general of the BSA, says: This rate rise may come as a shock to consumers, but the message from the BSA is don’t panic.
Over half of mortgages held with building societies will be protected from this rise, as they are fixed rate loans.
“A further rise had seemed quite likely at some stage and people have clearly been heeding the MPC’s warnings by locking themselves into monthly payments they know they can afford.
“While many people thought the decision would come later in the spring, the MPC has obviously come to the conclusion that it is not sensible to wait for the inevitable, when action can be taken now.
“There are number of factors which are likely to have influenced the Committee’s decision.
This includes the housing market, which continues to shows strong growth.
Nationwides house price index showed a rise of 9.3% in average house prices in 2006.
“The last two rate rises seem to have had little dampening effect on the housing market.
There will inevitably be a few people for whom this rate rise is the straw which breaks the proverbial camel’s back.
“If people think they will have trouble paying their mortgage and their credit cards and personal loans, it is vital they contact their mortgage lender, who will be able to help before things spiral out of
However, the majority of people borrowing from building societies will not see an immediate difference to their mortgage payments.”