Personal loan interest rates slashed across market

Tue, 24 Jan 2006

Price comparison website uSwitch has commented on what it calls a "continuous battle" in the personal loans market, which has seen personal loan providers cut interest rates on its products.

The uSwitch comments come after MoneyBack Bank announced that it has cut the interest rate on its personal loan to best buy interest rate of 5.5 per cent annual percentage rate (APR).

"It is interesting to see how lenders are reacting to their competitors leapfrogging them in the rates race to the number one best buy position," comments Andy Smith, the personal finance product manager at the website.

He points out that following cahoot's interest rate cut, the bank only managed to stay on top of the personal loans best buy tables for two days before being overtaken by MoneyBack Bank.

Personal loan providers like these have anticipated widespread speculation that a base rate cut is imminent, Mr Smith says, adding that they now offer "very competitive" interest rates.

"However, even with a base rate fall, these low rates are only sustainable if lenders can make up profits by successfully selling payment protection insurance," he warns.

The price comparison website is urging those planning to take out a personal loan, or who want to consolidate existing debts in a single personal loan, to shop around for the most competitive personal loan on uSwitch.

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