Personal loan rates on the rise
Personal loan rates had been at record low levels, while interest free balance transfer deals were offering record-long deal terms.
But following November’s Base Rate rise, lenders have hiked their rates, making it more expensive for people to borrow larger sums of money.
Four of the most competitive personal loan providers were offering a 2.8% or 2.9% rate for a loan of £10,000+ at the start of November, but now they’ve increased by as much as 0.70%, according to research from Moneycomms.
The table below reveals the rate rises:
The loan rate increases have only impacted the larger loan amounts with rates unchanged for those borrowing a lower £3,000. Andrew Hagger of Moneycomms said the rates were already much higher at this level and with a greater margin to absorb the impact of the Base Rate increase.
The research also revealed that credit card balance transfer deals have fallen. At the start of 2017, you could borrow at 0% for 43 months with both MBNA and Halifax. But these lenders have since slashed their interest free term by six and seven months respectively.
Hagger said: “The new squeeze on lenders is probably down to a number of factors, such as the recent Base Rate hike, concerns from the regulator and Bank of England regarding a possible credit bubble and inflation biting hard and reducing people’s disposable income.
“I suspect the sub 3% personal loan may soon become a thing of the past and I doubt we’ll ever see the record 43 month 0% balance transfer term breached again.