Rate cuts will not boost personal loan market it the short-term

Thu, 10 Apr 2008

An interest rate cut by the Bank of England might not make it easier to get a personal loan, one expert has warned.

Vicky Redwood, UK economist at Capital Economics, explained that as lenders have not passed on previous interest rate cuts to their customers it is unlikely that a future reduction will increase the availability of personal loans .

She said: "It is just that in the short-term that might not feed through into the rates we actually pay. Things are likely to get a little worse before they get a little better."

However, she added that it is expected that the Bank will cut interest rates "quite sharply" over coming months and that, eventually, this will have an effect on personal loan rates, meaning that credit of this nature should get cheaper.

The Bank's Credit Conditions Survey for the first quarter of 2008 revealed that lenders have reduced the availability of unsecured personal loans over the first three months of this year.
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