With the Bank of England interest rate held at 0.5 per cent for another month and banks' lending criteria still tight for both consumers and businesses, there has been little in the way of new product launches for the personal loans market recently.
Nationwide Personal Loan (7.7 per cent typical APR), Alliance & Leicester (7.8 per cent typical APR) and Sainsbury's Finance (7.8 per cent typical APR) continue to offer the most attractive rates on amounts of £10,000.
However the Nationwide offering is only available to customers with one of the bank's existing FlexAccounts, while the Sainsbury's deal is open to the supermarket's shoppers with a Nectar Card.
Alliance & Leicester offers its personal loan product to new and existing customers, who can choose to borrow from £7,500 to £14,950.
Despite the lack of fresh products on the market, borrowing did pick up in June, according to new figures published by the Bank of England.
Total net lending to individuals rose by £600 million during the month, however the majority of this was for homeowner loans – unsecured consumer credit actually fell by £100 million during the four-month period.
Those considering taking out a loan may wish to do so now, while the base rate is set at 0.5 per cent – particularly as analysts remain divided in their opinions as to when interest rates will start to rise.
What is clear this week is that there has been a backlash against leading banks and personal loan providers after many reported steep profits for the first half of the year despite the continuation of restricted lending conditions.
Lloyds Banking Group turned around its fortunes to post a £1.6 billion profit while HSBC last week announced pre-tax profits of £7 billion.
However, the British Bankers Association confirmed that providers are doing all they can to support the economy and that this profitability could indicate that general conditions in the money markets are beginning to improve.
Angela Knight, chief executive of the trade body, said:"Banks are well aware of their responsibility to society and our commitment to support the economy by lending to individuals and firms.
"The return of profitability to the banking sector is a positive sign and indicates that the sector is helping the UK economy move out of recession."
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