Personal loan rates triple in a year

Monday, 22 December 2008 12:00

The average personal loan rate has almost trebled in the last year.

At the start of 2008, the average rate on a £5,000 personal loan stood at 10.65 per cent but it is now at 29.40 per cent.

At the same time the number of loans on the market has almost halved to just 57.

In January, 74 per cent of loans were under ten per cent, this is now 31 per cent.

At the start of the year the highest APR on the market for a £5,000 loan was 13.1 per cent, but now there are now five loans charging between 50 and 70 per cent interest aimed at the subprime market.

The most competitive products for a £5,000 loan come from Zopa A-star Personal Loan at 6.96 per cent and Your Personal Loan at 7.8 per cent.

The least competitive products are offered by Oakam Bonus Loan charging 69.09 per cent and 60.16 per cent.

The rise in personal loan rates comes despite the Bank of England slashing rates to two per cent from 5.5 per cent.

Sean Gardner, chief executive of MoneyExpert.com, said: "December is normally a time to give, not it seems if you're a loan provider however.

"With unemployment on the up, lenders are increasingly thinking twice before offering money they're much less sure they'll get back. The cost of this risk is being passed on to us all with higher APRs and fewer products available."

• Tags:
• loans
,
• news
,
• personal loan