The Bank of England’s Monetary Policy Committee voted to increase the UK Bank Rate from 5.00% to 5.25% today.

The announcement made at midday suprised many experts and analysts, who had predicted a rise in February.

This increase comes hard on the heels of a 0.25% rise in November 2006, and is bad news for thousands of mortgage borrowers. Any borrower on a variaible rate deal will see their monthly repayments increase. On a £100,000 mortgage, today’s rise will mean an extra £15 a month to pay.

The Bank has raised rates in order to keep a rein on inflation, which has rocketed past its target level of 2% and is heading for 3%.

Healthier than expected retail figures were reported last week, indicating that we spent heavily in the shops over the Christmas period. This may have influenced the Bank’s decision to increase rates, as may mortgage lending figures for 2006, which reached record levels.