Personal loan rates rise sharply
Interest rates on personal loans have risen “sharply” over the past three months, reaching their highest levels in recent years.
New analysis of the latest Bank of England figures by Freedom Finance found that personal loans to the value of £5,000 and £10,000 saw the second largest monthly increase ever recorded during the third quarter of the year.
Meanwhile, lenders reported that the availability of unsecured credit to households is expected to decrease by the end of the year.
Emma Steeley, chief executive of Freedom Finance, said that the rise in loan rates shows how the cost of borrowing is starting to feed into lender appetite and affect all forms of consumer credit.
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“Borrowers have been battered this year by the rising cost of credit on secured and unsecured lending as interest rates have increased,” Steeley said.
“Personal loan rates are also a reflection of lender appetite, so this increase demonstrates the economic pain the UK is starting to suffer from.
“Our message for consumers looking for personal loans remains that they must ensure they are taking all the measures available to them to get the best and most appropriate products for their circumstances.”
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Steeley noted that digital marketplaces are a great option for anyone seeking consumer finance, as they can scan the market for the best deals, including those deals being offered by non-bank lenders such as peer-to-peer lending platforms.
“Record numbers of people in the UK are hunting for affordable credit to support them in this tough economic time,” added Steeley.
“The lending industry can play a positive role in helping people manage their money through this difficult period, using its data assets to provide a wide range of products and services to its customers.”
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