Credit crunch sends personal loan rates sky high
January 24, 2008
Borrowers in the UK could find themselves hit with extortionate interest rates on unsecured personal loans, as the credit crunch has resulted in a number of lenders raising interest rates by a significant amount, making unsecured borrowing far more costly for many people. Turmoil hit the UK’s financial markets over recent months, and was sparked by the credit crunch in the sub-prime sector of the United States.
Some lenders have pushed up the interest rates on their personal loans by 4% according to recent figures, and around nine lenders are thought to have pushed up their rates by up to this amount. Amongst these are Bradford and Bingley, Goldfish, the Cheshire and Derbyshire Building Society, and the Norwich and Peterborough Building Society.
One industry official stated: “With increasing uncertainty in the financial markets, rising levels of bad debt and a year of interest rate rises putting pressure on our disposable incomes, it comes as no surprise to see lenders increasing their lending margins.”
Personal unsecured loans are the latest financial product to have taken a hit as a result of the credit crunch, with many other financial products having already done up in terms of borrowing costs.
Mortgages, particularly in the case of those with bad credit, have gone up in terms of interest rates, and have also become more difficult to obtain, as lenders become more stringent. Credit card companies have also been hiking up interest rates on their cards for many customers, with some doubling the interest rate charged for some of their customers that the see as being at increased risk.
One industry expert stated: “Lenders are already tightening their attitude to risk and hiking up rates for the riskier categories of lending.”
- Personal loan rate cuts from Barclays Over recent weeks a number of high street lenders have hiked up the interest rates on their unsecured personal loans, some by a whopping 4%, which has made borrowing far more expensive for consumers looking
- Rise in loan costs due to PPI crackdown According to a recent report the ongoing crackdown in relation to Payment Protection Insurance, or PPI, on loans has resulted in an increase in costs and interest rates for those taking out personal loans. Officials
- Level of borrowing on personal loans decreasing Recently released figures have indicated that the level of borrowing on personal loans has been falling, as funding for both mortgages and unsecured loans continues to dry up. Officials from the price comparison service uswitch.com
- Interest rates on personal loans have been rocketing According to a recent report the interest rates on personal loans in the UK have been rocketing over recent months, with consumers now having to pay significantly more for some loans than they would have
- Increases on loan rates According to industry officials the interest rates being charges on many personal loans have been rocketing over recent months, with many loans charging more than double the base interest rate, which has fallen to just
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