The BoE monetary policy committee voted 7-2 in favour of keeping the rate at 0.1% - though financial experts believe it is only a matter of time before rising inflation forces the hand of committee members.
A higher bank rate will be good news for savers, but not for people with mortgages.
The BoE Monetary Policy Report for November says that inflation has risen above the 2% target. Prices rose by 3.1% between September last year, when prices were low because of the Covid pandemic, and September this year.
The document adds that interest rates are anticipated to need to rise "modestly" to return inflation to its 2% target.
It goes on: "We expect inflation to rise to around 5% in the spring next year. We expect these high rates of inflation to be temporary.
"We expect inflation to fall back from the middle of next year, and to be close to our target in two years' time."
Lenders making moves
The bank rate was cut to 0.1% in March last year in response to the effects of the Covid pandemic.
Financial markets think the bank rate will hit 1% by the end of next year.
Mortgage lenders are already hiking rates, even before the BoE acts.
Santander last week increased the rate on its two-year fixed mortgage deals so that it no longer offers sub-1% rates on any of its mortgage products.
Santander announces rises on 10 two-year fixed rate deals by up to 0.34%.
Within its five-year fixed deals, nine have seen rates jump by up to 0.37%.
Along with higher rates, on some deals Santander has also increased the required equity or deposit needed to apply for the mortgage, as well as a jump in the product fee. Some cashback incentives have also been removed.
Beat the rates rise
Our mortgage advisers are currently assisting homeowners looking to remortgage to the best possible rate. Please get in touch if you would like to discuss your circumstances with us.
Based on tax legislation at the time of publication. Please be aware that there will have been changes since this was published. Speak to your adviser for the most up to date information.
