Personal Loan Rates Hit Lowest Levels in Years

CHESTER, England, November 22, 2011 -

• Average rates for loans between GBP 7,500 and GBP 15,000 at lowest levels in four years
• Loan rates have continued to fall since peak in 2010  
• Rates on the average GBP 3,000 loans are creeping back up

Unsecured personal loan rates for those borrowing over GBP 7,500 have hit their lowest levels since the start of the credit crunch, according to analysis from Britain’s number one comparison site, MoneySupermarket. However, consumers looking to borrow smaller amounts are still paying considerably more, with average rates on loans for GBP 3,000 at the highest level for six months. 

The analysis found the average rates on the top 10 unsecured personal loans over GBP 5,000 have dropped, after rising to record highs in the first half of 2010. The most significant drop is among rates for loans between GBP 7,500 and GBP 15,000, which have fallen to their lowest levels since November 2007 - just as the credit crunch started to take hold. Currently, the average rate for the top ten GBP 7,500 loans is 6.79 per cent, a 1.48 per cent drop since the same time last year. In November 2007 the average rate was 6.72 per cent. However, anyone looking to take a loan for GBP 3,000 will pay an average of 15.15 per cent, a staggering 4.55 per cent higher than the average rate four years ago.

The change in rates means those borrowing GBP 3,000 will now pay GBP 701 more in interest than in 2007 - an 8.66 per cent increase, while someone borrowing GBP 8,000 now will pay, on average, GBP 385 less compared to the market high in 2009. Additionally, for someone borrowing GBP 10,000, the percentage paid will be 1.72 per cent lower than in 2009.

Tim Moss, head of loans and debt at MoneySupermarket.com, said: “The cut in Bank of England Base Rate to a record low in March 2009, led to reductions in mortgage and savings rates, yet loan rates remained high. Banks and building societies took the opportunity to decouple unsecured loans from Base Rate changes, leading to the rapid increase in the costs of borrowing, particularly for those looking to borrow less than GBP 5,000.

“Consumers have continued to feel the pinch with an increase in the cost of living, the rising price of fuel and with Christmas approaching, and many may look for ways to increase their purchasing power. We have seen providers dropping rates across the board to attract new customers and average rates have dropped right down to levels not seen since as far back as 2007- this can only be seen as good news for consumers. However, as we move into the Christmas period, it is likely that we will see rates rise as lenders tighten their books before reducing rates again in the New Year, when we can expect to see some more inventive propositions entering the marketplace for 2012 as competition increases.

“The decision to borrow should never be taken lightly; consumers needing an injection of credit should keep an eye on rates, particularly at the moment. Remember, the best personal loan rates are still reserved for those with excellent credit records and the introduction of Consumer Credit Directive (CCD) rules earlier this year means that only 51 per cent of consumers will get the advertised rate.”

Notes to editors:

moneysupermarket.com’s customer commitment

• No other site compares more prices or products
• We are independent so only find the best deals for you   
• The price you see is the price you pay - you don’t need to go direct and you won’t get a better deal doing so   
• Your details are safe with us and we won’t sell them to anybody

moneysupermarket.com compares (at 28th October 2011)

• 102 car insurance providers and 78 home insurance providers
• 12 broadband providers and 18 energy providers   
• 29 unsecured loan and 7 secured loan providers
• 62 mortgage lenders and 27 credit card providers
• 70 savings providers and 35 current account providers.
• Over 890,000 mobile phone deals

We promise to be clear and impartial

• All the products in our full search results tables are displayed in a completely unbiased manner.
• We don’t add fees or commissions on to the prices we compare.
• There may be times when another site compares more companies than us on a particular product, perhaps because of market changes or technical issues. You’ll be able to see this and know we are working hard to fix it.

We promise to be trustworthy

• We never use your data to make unwanted sales calls or send you spam.
• We never pass your personal information to third parties unless you give us permission to do so.
• Even if you choose to receive additional information from us, you can opt out at any time. 
• We promise to be supportive.
• You can use our community forum to get information and help from other customers.

If you need further help or support, you can contact our sales advisors, customer services agents.

Tim Moss
MoneySupermarket.com
+44(0)7818-430-459
Tim.Moss@moneysupermarket.com

Paul Lawler
PR Manager (Financial Services)
+44(0)1244-370317
paul.lawler@moneysupermarket.com

.