The inflation rate has risen and many believe it will surpass the 5% threshold before long.  This is placing more pressure on the Bank of England’s Monetary Policy Committee, or MPC.  The committee has the unenviable position of making the decision to raise the base rate or leave it at its current historic low of 0.5%.  The monthly meeting takes place this week.

The inflation rate has increased in the last few months to over 4%.  In order to control the rate and make it possible to slow down the rate of price increases across the UK, the MPC has its work cut out. 

One of the proponents of raising the rate since February, Andrew Sentance, has left the committee and will be absent for the first time during the month of June.  The committee is made up of nine members and there have not been more than three of those members vote for an increase during a monthly meeting so far.

The consensus within the UK among banks, lenders and other industry experts is that the base rate will probably get hiked before the end of the year. Even though many homeowners are expecting the rise to happen within the next few months, few are prepared for the increase in monthly mortgage cost.  Many believe the average monthly mortgage will increase at least 300 pounds per month. 

Ray Boulger, of John Charcol, commented on the coming rise in base rate, saying: "If you fix now for two years, you will need to fix again at a time when rates will almost certainly be higher.  On the other hand, only two banks are offering 10-year mortgages and the price you pay won't make it worthwhile."

Boulger believes in spending time researching the deals which are currently being offered and commit to one which best suits your situation and long term financial goals.