The Bank of England has raised interest rates by 0.5 percentage points.
The 14th rise in a row shows a determination to bring down high inflation.
The Monetary Policy Committee voted to increase rates by 0.5 percentage points from 4.5pc, more than the 0.25-point lift that had been expected by economists.
The time rates were at 5 per cent was in 2008.
However, the markets expect to current rate to surge higher.
The Bank of England rise comes after showed UK inflation held at 8.7pc in May, with underlying prices rising at their fastest rate since 1992.
Rising interest rates have increased concerns about the mortgage market, with the average two-year fixed residential mortgage rate hitting 6.15pc on Wednesday, according to Moneyfacts.
