The Bank of England has increased interest rates from 1% to 1.25% to help tackle soaring inflation and the cost of living crisis.
But today's rise means millions of people with mortgages and other debts will see their payments go up as a result.
The base rate which determines UK interest rates is set by the Bank of England.
It is the rate that banks and lenders use when they charge or pay customers.
This means it has an impact on when you're borrowing money, or if you have cash put away into a savings account.
When interest rates rise, you'll pay more for your mortgage and on certain debts like credit cards, but it does mean savings accounts should increase as well.
Interest rates are rising to try to bring down the rising cost of living. That's because when base rate goes up, inflation comes down as people are spending more.
Inflation is how much prices are rising by - and this figure is now at 40-year highs of 9%.
That means if something costs £1 today, and inflation stays at 9% for 12 months, the same item will cost £1.09 in a year.
But the Bank of England said it expects inflation to hit 11% by October due to rising energy bills .
A Bank of England statement said: "The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap."
In December 2021 the base rate rose from 0.10% to 0.25%, then to 0.5% in February 2022, 0.75% in March and 1% in May, before the rise to 1.25% today.
The base rate has stayed at 1% or below since February 2009.
But while the Bank of England is putting base rate up to bring down rising costs, in the short term it means some Britons will be paying even more.
This is because mortgage firms and lenders normally pass on base rate changes in full.
What does it mean for your money?
Millions of borrowers and savers will be affected by today's base rate hike, as well as people in debt.
A base rate rise of 0.25 percentage points might seem small, but it means paying an extra £175 a year on the average mortgage.
People with fixed-rate mortgages will be protected against this increase until their mortgage term ends.
Paul Broadhead, of the Building Societies Association, said: “Another Bank rate rise, the fifth since December, will be very unwelcome news for many homeowners.
"With around eight in ten mortgage holders on fixed rates it will take time for these rises to be felt by most borrowers, as they will continue to pay the same each month until their current deal ends.
“Anyone who is worried about their ability to pay their mortgage should get in touch with their lender early. Lenders will do everything possible to help.”
But it will kick in almost automatically for those on variable-rate or tracker mortgages, which as the name suggests "track" base rate.
Lenders will also use the base rate increase to increase what they charge people to borrow.
It means the cost of borrowing on credit cards, personal loans or store cards could rise too.
Alice Haine, Personal Finance Analyst at Bestinvest, said: "The latest interest rate rise will eat into the Government’s recent handout to support struggling households.
“Households are struggling to keep a grip on their finances in the face of soaring food, fuel and energy bills, as well as higher taxation thanks to a combination of the April increase in National Insurance rate and frozen pension allowances."
But base rate rises are good news for savers, who should get more interest on savings deals as a result.
Richard Lane, of debt charity StepChange, said: “We urge anyone beginning to experience financial pressure or debt problems to take action rather than simply hoping things will improve. Do talk to your lenders, and if that feels difficult or overwhelming then contact a reputable debt advice charity -you can do this online if you prefer.
"If that still feels too much, then start by looking at our cost of living guide for help on how to get started with addressing your cost of living debt pressures.”
We've got more information on the winners and losers of today's hike here .
Why do interest rates change?
The Bank of England sets the base rate in the United Kingdom every month.
Base rate is basically a financial 'lever' that the Bank can pull to help control the economy.
Rising base rate means it's more expensive to borrow, so consumers and businesses save instead - meaning spending drops and inflation does too.
Lowering base rate does the opposite, encouraging everyone to spend and not save, which means higher inflation.
The Bank can also vote to keep base rate as it is and not change it.
It's been doing this independently from the government since May 1997.
But it is still guided by the government, which sets it targets to achieve.
