Personal loan rates bear the brunt of credit crunch
Personal loan rates have rocketed by up to 4% as the credit crunch continues to impact adversely on consumers.
According to financial website Moneyfacts.com, nine High Street lenders have raised the cost of their personal loans this week, with Bradford & Bingley increasing the rate on its loans between £2,000 and £2,950 by four percentage points.
Northern Rock, famously hard hit by the crunch, pushed up the interest rate charged on its personal loans to 7.9% across the board.
Said Moneyfacts spokesperson Lisa Taylor: “With increasing uncertainty in the financial markets, rising levels of bad debt and a year of interest rate rises putting pressure on our disposable incomes, it comes as no surprise to see lenders increasing their margins.”
Although the initial furore over Northern Rock has died down now that it has become a subsidiary of the Bank of England, the general financial situation is far from rosy. Rising personal loan rates will pile the pressure onto hard-pressed families, possibly depressing consumer spending and adding woes to a High Street living as much on its nerves as punters parting with cash. I would like the Monetary Policy Committee to cut rates by 0.25% today to avoid such a scenario – but recognise that there is as much likelihood of that as Tottenham Hotspur winning the league title this season.