Credit crunch 'has hit loan rates'
Published On 1 April 2008
Following on from the credit crunch, banks and building societies have increased their personal loan rates noticeably in the first quarter of 2008, despite the fact that the Bank of England decided to cut the base rate earlier this year.That is according to independent financial advisory service MoneyExpert.com, which warned that average rate on all unsecured personal loans has increased to 11.4 per cent this year, up from 10.62 per cent at the beginning of January.
It explained that the cost of borrowing is increasing irrespective of how much money is being borrowed, with rates on balances of £2,500 up from 9.49 per cent in January to 10.11 per cent at the end of March. The average rate on a £10,000 loan has increased from 8.88 per cent to 9.55 per cent over the same period.
Sean Gardner, of MoneyExpert.com, said: "Over 180,000 people consolidate their debts every month, and the vast majority turns to an unsecured personal loan to help them control their finances.
"However lenders are wary of customers' ability to repay what they owe so are becoming increasingly strict when it comes to choosing who they lend money to.
He added, however, that consumers should not be put off borrowing money, and that there are still competitive rates available, particularly for people with a good credit history.
