Fool.co.uk responds to today's interest-rate hike by the Bank of England

David Kuo, Head of Personal Finance at Fool.co.uk, says:

"The Bank of England's decision to raise interest rates by 0.25% to 5.5% today was widely expected.

For many homeowners with variable-rate mortgages, this will translate to an extra £15 a month on a 25-year £100,000 repayment loan.

"However, for almost three out of four homeowners, today's rate hike will have no immediate impact.

According to the Council of Mortgage Lenders, fixed-rate mortgages now account for 76% of loans for house purchases.

"But homeowners on fixed-rate deals should try and do more than pat themselves on the back.

This is a good opportunity to capitalise on their good fortune and overpay their loans at lower fixed interest rates.

"By overpaying just £15 a month on a 5.25% fixed-rate deal homeowners would not only slash almost £4,500 off every £100,000 borrowed, but also cut the time to repay the loan by over a year.

"Better still, overpay by as much as your lender will allow because the sooner you pay off your mortgage, the sooner you can remove the mortgage millstone from around your neck.

"The Bank of England may have taken its eye off the ball and allowed inflation to creep up unnoticed.

But homeowners don't have to pay for the Bank's error, and overpaying your mortgage is probably the best risk-free rate of return for your money.".

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