With most analysts predicting no rise in January 2007, the city was shocked when the Bank of England announced a further rise in the base rate of interest. Most had expected a rise to come in February, but having early sight of the latest inflation figures, the Bank decided to act sooner rather than later.

That makes this the third rise in the last six months, taking rates to 5.25%.

Analysts are now predicting that 3 more rises are not out of the question for the rest of 2007 which will takes rates to 6%.

The plan is to slow down the growth of consumer spending in britain which in turn is driving up inflation. The expected decrease in energy prices later this year may help to do that, but there is no doubt that this rise will start to worry many UK homeowners with larger mortgages.

Bank holds increases rates to 5 per cent - November 2006

Bank announces surprise interest rates rise - August 2006