Loan rates rise and market shrinks

The UK loan market is shrinking as rates rise, according to new research.

In total there are only 52 different personal loan deals left on the market – down from 56 a month ago.

And with less choice, come higher rates as the second wave of the credit crunch pushes up the cost of borrowing once more from eight providers.

uSwitch.com records the following personal loan increases:

• Black Horse
  Rates by up to 9% - up to 36.9% APR for loans of £1,000-£2,999 and 25.9% APR for loans of £5,000-£7,499.
• Bank of Ireland
  Personal loan rates up from 8.9% APR to 10.7% APR.
• Bradford & Bingley, Lloyds TSB, Marks & Spencer
  All increased unsecured personal loans by 1%.
• Barclaycard Loan rates up from 7.8% APR to 8.4% APR. .
• Asda
  Personal loan rates up 0.5 per cent from 7.4% APR to 7.9% APR.
• Sainsbury’s Finance
  Loans rise from 7.7% APR to 7.9% APR - up 0.2%.

Louise Bond, personal finance manager at uSwitch, said: “As the news agenda overflows with the global financial meltdown, a plethora of loan rate increases have been implemented in the past four weeks.

“Personal loan 'best buys' are changing every day which demonstrates just how unpredictable and volatile the current climate really is."

Following recent rate increases, both Asda and Barclaycard have fallen from the best buys for a loan of £10,000 over five years.

“In the summer months we kissed goodbye to sub-seven per cent APR loans when the remaining six providers dropped out of this bracket but the sub-eight per cent offering is still prominent. Overall, the loan market is vast but there are still some good deals out there so consumers should still shop around.”


uSwitch personal loan best buys on £10,000 loans over five years without repayment insurance:

• Your Personal Loan.co.uk:7.60% APR, monthly repayment £200.76
• AA7.70& APR, monthly repayment £202.82
• Moneyback Bank7.80% APR, monthly repayment £200.72
• Lombard Direct7.80% APR, monthly repayment £200.72