The Bank of England has raised interest rates for the first time in more than three years, in response to calls to tackle surging price rises.

The increase to 0.25 per cent from 0.1 per cent followed data this week that showed prices climbing at the fastest pace for 10 years. It came despite fears the Omicron variant could slow the economy by causing people to spend less.

As a result, landlords are bracing themselves for higher borrowing costs.

Angus Stewart, chief executive of online mortgage broker Property Master, says: “It looks as if even the intervention of the Omicron variant could not throw the Bank off its chosen path.  Now the process of rising rates has begun we should brace ourselves for further increases in the New Year.

“What we can say with certainty is the availability of low buy-to-let mortgage rates has to a large extent obscured the pressures on landlords operating in the private rented sector.  

“The impact on landlords of the increasing cost of regulation, higher taxes and the removal of various tax benefits has been cushioned whilst finance costs remained low.  As rates start to increase it will hit landlords in the pocket and we may well see at least the smaller ones decide buy to let is not an investment for them.”

The Bank’s Monetary Policy Committee voted by eight to one in favour of the increase.

Rates had been at 0.1 per cent, a record low, since March last year, when they were cut in response to the effects of the pandemic.

Economists had expected a rate rise at the MPC’s last meeting in November, but policymakers voted to hold fire. This time, analysts expected a further delay because of Omicron, but the committee thought differently.