Moneyfacts Confirm Interest Rate Increase on Loans

Fri, 30 Oct 2009

New figures from Moneyfacts.co.uk have confirmed that consumers have suffered at the hands of anxious lenders despite a series of interest rate cuts by the Bank of England. The Banks numerous interest rate cuts culminated in rates falling to a record low level of 0.50 per cent in March, though lenders have failed to pass the benefits on to borrowers.

Providers of personal loans , credit cards and other forms of credit have increased interest rates on their products since March, with Michelle Slade of Moneyfacts citing high risk lending as the main reason for the interest rate increases. After the lessons of the credit crunch, when lenders approved hugely risky loans, lenders are charging a premium on loan deals to cover the potential cost of any defaulting borrowers.

As a result, borrowers are now being faced with an extra £335 on an average loan of £25,000, taking total repayments on a typical loan of that size to £26,804. The increase will undoubtedly make it harder for struggling borrowers to pay off their debts, while Moneyfacts are encouraging borrowers to shop around for the best deal before taking out a loan.
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