The cost of borrowing now stands at 5.25%, the highest rate since the financial crisis in 2008.

The announcement, made at midday, inflicts yet more pain on variable rate mortgage holders and those coming off low fixed rate deals.

According to Moneyfacts, the average two-year fixed residential mortgage rose to 6.66% in early July.

Bank of England governor Andrew Bailey said the latest base rate rise was necessary to achieve the aim of getting inflation down to 2%.

Two members of the Bank’s decision-making Monetary Policy Committee (MPC) voted to hike the rate further, while one wanted to keep it unchanged.