Loan rates 'hit seven year high'

19/08/2008

People who take out personal loans are being hit with higher repayment rates than before.

Financial website Moneyfacts.co.uk has released new figures, showing that some best-buy rates have hit their most expensive level for years

For example, the cheapest deal on offer from lenders for a £5,000, three-year loan stands at 7.6 per cent - the highest since 2001.

The credit crunch has been blamed for this trend, with banks hit by higher borrowing costs on the wholesale money markets, and then passing these on to the consumer.

Prior to the crisis, consumers had also become accustomed to comparatively cheap personal loan rates.

Moneyfacts.co.uk analyst Michelle Slade explained: "In the last few years the market for personal loans has been extremely competitive as lenders and borrowers alike cashed in on the availability of cheap credit.

"Increased competition pushed prices down and lenders continually undercut each other in order to top best buy tables."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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