Loan rates 'highest for 7 years'
It was announced yesterday that loan rates have reached their highest point for seven years, as lenders tighten their deals due to the pressure of the credit crunch - passing the risk of higher costs to their customers, rather than trying to solve the problem themselves. The average loan rate is now as high as it was in 2001 for the first time, highlighting the real problems the UK economy is facing today.
Since August 2006, the average loan rate on offer has increased by just less than three percentage points - from 8.1% to 11% today, marking the highest rate for unsecured loans since 2001. The steep rise may be due to the fact that over the last few years, the market for personal loans has been increasingly competitive as both lenders and borrowers cashed in on the availability of cheap credit. This competition therefore pushed prices down as lenders continually strived to outdo each other so that they could top the 'best buy' tables, therefore attracting more customers.
However, the tightening that has come as a part of the credit crunch may spell disaster for many customers, with Michelle Slade at Moneyfacts.co.uk saying that "This is extremely bad news for consumers who may be considering consolidating existing debts to try to drive down their monthly expenditure. At a time when every penny counts, if you need a personal loan, you need to make sure that you shop around as it is highly unlikely your bank will offer the best deal."
Share this..
Related stories
Kraft Foods attacks Cadbury defence document
Cadbury has today released a defence document which it hopes will highlight the value of the company going forward and place more focus upon what the company sees as a derogatory bid from Kraft Foods. However, in some ways Cadbury directors have played into the hands of Kraft Foods as the defence document issued today includes only headline figures and no audited management forecast the 2010. So w...
Read MoreWould BP be able to fight off any takeover offer?
The very fact that the market capitalisation of BP has fallen by in excess of £100 billion since the Gulf of Mexico disaster began would obviously at some stage make the company a potential takeover target. However, in a startling development to the situation it is believed that the US government has unofficially given oil giant Exxon the "go-ahead" to at least consider an offer of BP. This would...
Read MoreWas Germany helped by a weaker euro?
This week's very impressive growth figures for the German economy in the second quarter 2010 brought gasps from many economists. However, on further consideration it looks as though Germany has more than any other country in the euro zone benefited from a massive increase in exports helped by the weaker euro. So is this improvement in the German economy a short-term event? All eyes will be on t...
Read MoreUK government set to adjust growth forecasts
Chancellor Of The Exchequer Alistair Darling will next month adjust his growth forecast for the UK economy from a contraction of 3.5% in 2009 to a fall of 4.75%. This is the lowest post-war growth forecast with regards to the UK economy and will certainly be a blow for confidence as the UK government looks to highlight the "recovery" in the UK economy as we head towards the next general election....
Read MoreUK government under pressure over potential Vauxhall job losses
Despite Gordon Brown and Lord Mandelson issuing a joint statement yesterday which indicated that they would fight tooth and nail to protect Vauxhall Motor jobs in the UK, a leaked document by Canadian outfit Magna International, which is a potential bidder for the operation, would seem to suggest that cost-cutting in the UK could be severe.
While there has been no confirmation of th...