Personal loans rationed as costs rise

UK borrowers looking to take out a personal loan will find it increasingly difficult as banks tighten their lending criteria and increase the cost of personal loans to limit the best deals to existing customers.

The average rate of a best buy £5,000 loan has risen by 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates remaining at just 0.5 per cent.

Research also revealed that eight out of nine high street lenders have restricted their loan offerings to existing customers, typically those who hold a current account .

While the number of people searching for a loan using its services has increased by 20 per cent since the end of last year, figures from the British Bankers’ Association showed that borrowing through personal loans has dropped by 28 per cent over the same period.

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