Loan rates drop to two year low
January 8, 2011
Over recent years the rate of interest charged on personal loans has been rocketing, even thought the Bank of England base rate has been at its all time low of just 0.5 percent for nearly two years. However, just as speculation has started to increase over when the base interest rate will rise lenders have started reducing the interest that is charged on their mid-range loans.
The rate of interest being charged on loans of between £7500 and £15000 is said to have fallen to the lowest level in over two years, with the last time the rate was as low as it is now being November 2008. This will come as good news for the many people that may be thinking about taking out a personal loan for purposes such as consolidation or to make purchases, as it means that they can enjoy an average rate of as low as 7.3 percent, which is the rate available from banking giant Santander.
A number of lenders have dropped the rates being charged on their £7500-£15000 loans, and this is due to increased competition in the market. However, the interest rates on smaller loans such as £3000 or £5000 is said to have increased in the past two years, which means that some borrowers may find that they are better off taking out a slightly larger loan so that they pay far less in the way of interest.
Some are concerned that the rates are being targeted at existing customers by some lenders.
One official said: ‘It’s welcome news for customers to see loan rates falling at long last and from some of the largest providers in the market. It’s a shame that the rate cutting has, apart from Tesco and M&S Money, been targeted at existing customers only. The other downside is that lower interest rates are not on offer for smaller borrowings, so for anyone looking to borrow a sum of say £2,000 to £3,000, the interest rate will be well into double figures and in some cases pushing 20% APR.’
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