While the benchmark borrowing cost may have risen, the central bank left the bank rate unchanged at 6%.
It has the power to change the interest on these home loans, even if the Bank rate does not move.
BBC: Bank of Ireland: Andrew Tyrie writes to FSA over rate rise
The bank rate is used to price medium- and long-term loans and is at its lowest level for three decades.
The rising rate of inflation comes at the same time as the Bank rate continues at a record low of 0.5%.
The Bank of England's Monetary Policy Committee cut the Bank rate by half a percentage point to 4.5% in a surprise move last Wednesday.
Kevin Mountford, of Moneysupermarket.com, said that the margin between the Bank rate and the interest paid by savings accounts was actually very high at present.
From 1 May, the bank will raise the mortgage rate for residential customers from, typically, the Bank of England rate plus 1.75%, to the Bank rate plus 2.49%.
BBC: Bank of Ireland: Andrew Tyrie writes to FSA over rate rise
But with the Bank rate unlikely or unable to fall further, new home loan demand is shifting back to fixed-rate deals, rather than mortgages which track the Bank rate.
"But Libor still remains high relative to the Bank rate and any improvement in credit market conditions will take time to feed through into the mortgage market, " he added.
At the same time, the RBI left the bank rate unchanged at 6%, maintaining the repo and reverse repo rates at the current levels of 4.75% and 3.25% respectively.
In its third-quarter credit policy review, the Reserve Bank of India left the bank rate at 6% and the key lending rate, which was cut as recently as Jan. 2, at 5.5%.
Activity in the housing market will not do "terrific things" until the Bank rate rises, he says, predicting a 0.25 percentage point rise next August followed by an identical rise by the end of 2012.
Earlier, in October 2008, the bank had written to some Halifax customers, telling them it would raise the standard variable rate (SVR) 'cap' on their mortgages from 2% above the Bank Rate to 3% above it.
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So banks that help small companies will receive what looks like a big subsidy (the interest rate charged will be 0.75%, unless - which is about as likely in the coming months as me being asked to come on as a substitute for Arsenal - the Bank of England increases the Bank Rate from 0.5%).
With hyperinflation, a gap of around 10:1 has opened up between the official exchange rate operated by the bank and the true rate reflected in the black market.
As per Liam Halligan in the Sunday Telegraph: there is no such thing as a "risk-free rate" set by sovereigns anymore, and you get an unsustainable hike in the bank borrowing rate in Italy which sinks the aforementioned Italian banks and then the contagion spreads to France.
As expected, the Bank of England today announced that the Official Bank Rate would remain unchanged at 0.5% and there would be additions to the Asset Purchase Facility.
Posted 6.59am: The BBC has seen documents which show that ministers in the last Labour government held discussions with banks about policies which would allow the Libor rate - the inter-bank lending rate - to fall.
In effect, the bank now has a target range for short-term rates: the upper bound is the 1% refi rate and the lower bound is the rate the central bank pays on banks' deposits with it, currently 0.25%.
What is most worrying the Bank, in the current climate, is the rise in the spread between the very low bank rate it has set to spur growth and the much higher interest rates that banks are charging to lend to companies and households.
The US bank prime rate set by the Federal Reserve remained unchanged at 3.25 percent, where it has been since January of 2009.
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The US bank prime rate remained unchanged in the second half of September at 3.25 percent.
Ray Boulger, at mortgage brokers John Charcol, estimated that in the past 10 years, at any one time only about 250, 000 UK residential mortgages would have had a home loan linked to the Libor rate, rather than the Bank of England's base rate.
Yet now interest rates have gone even higher (this week the central bank raised the overnight rate from just under 30% to 32%), in order to stop the floating currency from sinking out of sight.
The discount rate is the interest rate that the central bank charges commercial banks that need to borrow additional reserves.
The chances are rising for a European Central Bank rate cut from the 1% overnight rate currently, and those chances increase if the Greek election result suggests that the country is giving up on its agreement with Germany to lower its debt and cut spending.
Despite the fall in June's inflation rate, the figures mean the CPI rate has still overshot the Bank of England's 2% target for 35 of the past 41 months.
With the Bank of England's bank rate still at a historical low of 0.5%, the BSA warned that interest rates were so low that this year savers might take more money out of their savings accounts than they put in.
It is noteworthy that Pereira has made important, market-moving speeches before the key August 2011 meeting (when the bank surprised the market by cutting rates) and at the last monetary policy meeting (where the bank slowed the pace of rate cuts to 25 basis points).
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