Loan and mortgage rates drop
June 30, 2011
For many borrowers in the UK there has been some welcome news recently, after it was revealed that both mortgage and personal loan rates have been falling. For those that are taking out mortgages, thinking of refinancing, or wish to take out a personal loan this could mean significant savings on the cost of their borrowing, which is something that many people are looking for in the current financial climate.
The base interest rate in the UK still stands at its record low of just 0.5 percent, where it has been for well over two years now. The good news for consumers is that with loan and mortgage rates now dropping further, borrowing becomes far more affordable. Mortgage rates are said to have dropped to their lowest level in twenty three years according to reports. Many person loans are now offering rates of below 7 percent.
Figures show that the average rate on a loan of between £7500 and £15,000 is 8.6 percent, but due to individual lenders dropping their rates to compete more fiercely there are some very good deals about with these mid-range loans available for under 7 percent. However, interest rates are much higher on smaller loans, with the average rate on a loan for £3000 coming in at an average 19.1 percent.
This means that those considering a personal loan will need to determine whether they could actually be better off taking out a slightly larger loan in order to get a far more competitive interest rate than a small loan with high interest rates.
One finance expert said: “For anyone looking to carry out home improvements, a personal loan is a good choice - particularly for borrowers who are prevented from increasing their mortgage due to loan to value restrictions. Let’s hope other banks and building societies are forced to follow suit to maintain their slice of the market.”
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