Stakeholder Response: Council of Mortgage Lenders

CML director general Michael Coogan said: "The timing of this rise is sooner than we expected, although we have been forecasting higher rates. 

"Inflationary pressure appears to be more pronounced, not least because of the prospect of higher wage growth, and we would not be surprised if rates now ended 2007 at 5.5 per cent rather than the 5.25 per cent we forecast back in December.

"Mortgage borrowers who are concerned about the impact on affordability can still consider a wide range of attractive fixed-rate deals. Anyone borrowing on a variable-rate basis should factor in an expectation that rates have further to rise."

Stakeholder Response: British Retail Consortium

Director general Kevin Hawkins said: "The Bank has overreacted. This is an unnecessary blow.

"The effect of the November rise has not yet worked through to household spending and, coming so soon after, another rise will hit consumers hard.

"Much of the rise in consumer prices the Bank is trying to tackle has been driven by rising food costs caused by increases in world commodity prices resulting from poor harvests.

"This is a temporary problem which this interest rate rise will do nothing to resolve."

Stakeholder Response: Nationwide

Stuart Bernau, executive director, Nationwide, said: "The changes we are making to our mortgage and savings rates are relatively straightforward and simple. 

"We are pleased to be able to act quickly to make it clear to our members how they are going to be affected following the increase in the Bank of England Base Rate. 

"However, changes to mortgage rates will not take effect until 1 February and savings rates will be increased at the same time. 

"All Nationwide mortgages offer consumers a range of flexible features.

"Nationwide also calculates interest on a daily basis and does not make a higher lending charge for high percentage borrowing. 

"Nationwide continues to offer some of the most competitive mortgage and savings rates on the high street."