Personal loan rates soar since January

Friday, April 04, 2008

Interest rates on personal loans have soared by 11.4 per cent from only 10.62 per cent in January.

The rise means that not only is securing a personal loan harder, but those who take out such loans have to pay more back to the lender. This will contribute to lower consumer spending, which is a crucial factor in driving the economy.

Data from MoneyExpert.com reveals interest rates on personal loans are rising across the board, despite the Bank of England cutting interest rates. Such a move is proving pointless as banks do not seem willing to lend to each other. A loan of £2,500 on an average £2,500 loan now stands at 10.11 per cent, up from 949 per cent three months ago and a £5,000 loan rising in cost from 9.76 per cent to 9.93 per cent.

Sean Gardner of MoneyExpert.com said: "There are still competitive rates out there, particularly for people with good credit records,those in muddier waters can still borrow but may have to pay more than they would have done even three months ago."

Small loan rates seem to be the hardest hit, suggesting that banks want to lend bigger amounts but to a smaller pool of borrowers. Supermarket lenders such as ASDA and Sainsbury still offer loans of £7,500 at rates as reasonable as 7.5 per cent.

Source: http://www.onlyfinance.com/Loans-News/12749064-personal-loan-rates.aspx