Monday, February 01, 2010
UK loans interest rates hit a 9 year peak
UK bank personal loan rates have climbed to a nine year high because of a rise in bad debts as borrowers fail to meet their loans repayments.
Experts said banks are increasing rates to recoup the losses stemming from defaults on loans.
Rising unemployment during the recession saw households struggling to meet the repayments on their debt.
The best rate currently available on a three year loan of £5,000 is almost 9 per cent – or nearly £160 – a month, according to personal finance website Moneyfacts.
It is in sharp contrast to rates of almost half that amount before the beginning of the credit crisis in 2007.
The rise comes despite the Bank of England keeping interest rates at a historic low of 0.5 per cent for the past year.
Rates were last at their current level nine years ago when the Bank Rate was a much higher 6 per cent, meaning banks have significantly increased their profit margins on personal loans.
The average rate today on a personal loan is even higher at 12.4 per cent.
Experts said banks are increasing rates to recoup the losses stemming from defaults on loans.
Rising unemployment during the recession saw households struggling to meet the repayments on their debt.
The best rate currently available on a three year loan of £5,000 is almost 9 per cent – or nearly £160 – a month, according to personal finance website Moneyfacts.
It is in sharp contrast to rates of almost half that amount before the beginning of the credit crisis in 2007.
The rise comes despite the Bank of England keeping interest rates at a historic low of 0.5 per cent for the past year.
Rates were last at their current level nine years ago when the Bank Rate was a much higher 6 per cent, meaning banks have significantly increased their profit margins on personal loans.
The average rate today on a personal loan is even higher at 12.4 per cent.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, loans, sub prime loans, UK loans rates
