Unexpected rate rise will concern housebuilders as Bank of England says inflation will rise further in the near term

The Bank of England has raised interest rates by a quarter point in a move that will dismay housebuilders.

The Monetary Policy Committee, which decides on interest, said it had voted for the rise in order to curb inflation. The CPI measurement of inflation was 2.7% in November, way above the government’s target of 2%.

The MPC said they expected inflation to rise further in the near term before dropping back down.

Paul Smith, chief executive of Haart estate agents, said: “The housing market is stable and currently showing modest overall growth but the latest rise in interest rates could cause a substantial change in homebuyer attitudes and significantly dampen activity in the housing market."

The news will be a blow to housebuilders who are worried about the impact of a rate rise on sales.

Smith added: “The latest announcement is particularly bad news for first time buyers who are finding it increasingly difficult to get on the property ladder.”