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What does the Bank’s interest rate hike mean for people’s finances?

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The Bank of England has votedto hike interest rates by 0.5 percentage points to 2.25% — the seventh rise since last December.

So what does this mean for your finances?For the 2.2 million people on a variable rate mortgage, the rise is very bad news, leaving many having to pay hundreds of pounds extra a year.

About half of them are either on a tracker directly linked to the Bank base rate or a discounted-rate deal, according to recent Financial Conduct Authority data.

The other half are on their lender’s standard variable rate (SVR).A tracker mortgage directly follows the base rate – the small print of your mortgage will tell you how quickly the rise will be passed on, but in the next few weeks your payments will almost certainly go up, reflecting the full base-rate rise.

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