Sainsbury’s Bank has leapt to the top of the best buy tables by launching a personal loan rate of 5.9 per cent – the first to fall below six per cent since September 2007.
The rate applies to loans of between £7,500 and £15,000 taken over one to three years.
According to analysis by MoneySupermarket.com, loan rates are coming down. Average interest rates for the top 10 unsecured personal loans have dropped to 6.27 per cent, the lowest rate since May 2007 when the average was 6.28 per cent.
Tim Moss, the comparison site’s head of loans and debt, said: “This rate reduction by Sainsbury’s Bank is a real landmark – there hasn’t been a rate below six per cent since the financial crisis began.
“Although it is unclear at this stage how other providers will react, it is good to see rates coming down despite the country falling back into recession.”
Demand for personal loans has remained high this year as consumers look to consolidate debts from other forms of borrowing, Mr Moss said.
He added: “To qualify for this market leading loan rate from Sainsbury’s Bank you have to take it out over one to three years and be a Nectar cardholder.
“The other key thing that affects the rate of loan you are offered is your personal credit score.
“This low rate of 5.9 per cent will only be available to those with excellent credit histories. Anyone who doesn’t fit this profile may be declined or charged a higher rate of interest.”