POTENTIAL mortgage holders in Oxfordshire will not be put off by an increase of the Bank of England’s interest rate, according to experts.

The Bank of England's Monetary Policy Committee voted to raise rates from 0.25 per cent to 0.5 per cent on Thursday – significant because it was the first increase in rates since July 2007.

Millions of borrowers on variable rate mortgages can expect to pay more in repayments, which could mean increasing them by about £15 every month for the average home.

About 60 per cent of people with mortgages im the UK are on fixed rate terms so payments will not increase for them.

Omar Nawaz, the manager of Connells estate agents in Cowley, said: “The interest rate is still pretty low so if people are looking to purchase, it’s not going to have a huge impact on them. It’s a little bit too early to say (what the impact will be).

"It’s still a buoyant market. The interest rate is only 0.5 per cent; it was 0.25 per cent before and now it’s 0.5 per cent again.

“Although it’s gone up it’s not at a level that should worry buyers too much.

"They will still be able to get mortgages at a very reasonable rate in comparison to the past. It is not an overheated market; it’s balanced out a little bit.”

When the decision was announced last week, the Bank of England's governor Mark Carney said it was time to try to balance out potential hiccups with inflation.

It is expected to peak at about 3.2 per cent over coming months.

When the news was announced by Mr Carney last week, Oxford mortgage adviser Mandy Best, of Best Financial Planning, said: “The 0.25 per cent increase shouldn’t have a massive impact on the mortgage rates.

“In Oxford locally, people need money and they are going to try to get as much money as they can (in house prices).”

Charges are not expected to increase immediately, with lenders set to introduce increased repayments steadily.

The increase in interest rates is good news for savers, who have been unlikely to make big returns recently because of low lending rates.

Mr Carney said he expected all providers to increase returns for savers soon and said the 'worst' of wage stagnation should be over.

He said: “Households are generally well positioned for an increase. More are in work than ever before. Only about one-fifth of people with mortgages have never experienced an increase in rates.”

Mr Carney added: “It isn’t so much where inflation is now, but where it’s going that concerns us."