Nationwide Building Society has lifted rates for existing variable rate borrowers following the second interest rate rise by the Bank of England in three months.

The mutual says its base mortgage rate and standard mortgage rate products will rise by 25 basis points to 2.50% and 3.99%, respectively. The hike will come into effect on 1 March.

It adds that customers on tracker deals will see the cost of their loans rise by 25bps, as outlined in their mortgage agreements, also from 1 March.

The move comes after the Bank of England’s Monetary Policy Committee lifted its base rate to 0.5% from 0.25%, to combat rising inflation.

Inflation is currently at 5.4%, driven by rising gas and electricity costs, well above the Bank’s 2% target.

The Bank added it expects consumer prices index living costs to peak at 7.25% in April, which is around 2% higher than it forecast in its November Report.

This latest rise from the central bank follows an unexpected hike in December, where the base rate moved from a historic low of 0.1% to 0.25%.

Nationwide says its base mortgage rate is the revert to rate for the firm’s mortgages taken out on or before 29 April 2009, while its standard mortgage rate is the revert to rate for mortgages taken out on or after 30 April 2009.

Earlier this week, the building society’s monthly survey showed that house prices jumped by 11.2% on an annual basis in January.

It said this was the strongest start to a year since 2005 and it lifts the average price of a house across the UK to £255,556.

On a monthly basis, the lender’s report shows that house prices increased by 0.8% last month.