But you’re still better borrowing more, says MoneyExpert.com
Average rates on unsecured loans of £5,000 and £7,500 have increased by up to one per cent in the past six months despite the Bank of England cutting rates THREE times, according to new research from MoneyExpert.com*.
Loan firms have narrowed the gap between rates at £5,000 and £7,500 but it is still cheaper to borrow more – if you can get a loan, MoneyExpert.com says.
The independent comparison website says the average rate for a £5,000 loan is now 10.16 per cent compared with 9.4475 per cent in November 2007 while the average rate for a £7,500 loan has increased by 0.91 per cent to 8.88 per cent compared with 7.97 per cent in November 2007.
Lenders are still offering deals for less than seven per cent – but the rates on the most competitive deals have increased from 6.4 per cent in November to around 6.9 per cent now.
And around 1.38 million people** have had loan application turned down in the past six months as lenders have imposed tougher criteria when deciding to allow borrowers to take out loans.
Sean Gardner, founder of MoneyExpert.com, said: "The Bank of England has a battle on its hands to restore confidence in the credit markets when lenders react to three rate cuts totalling 0.75 per cent by actually increasing rates."
"The unsecured loans market is almost mirroring the mortgage market where the issue is not so much rates but availability – whether or not lenders will let you have the cash."
"However it remains the case that creditworthy customers can still access competitive deals and borrowers should research the market carefully before making an application."
"And you will pay lower rates on average if you borrow more. Lenders take the view that those borrowing more are generally a better risk than those borrowing less and offer better deals as a consequence."
The most competitive deals at £5,000 include Your Personal Loan, which is only available to homeowners, at 6.9 per cent or Wesleyan Personal Loan at 7.4 per cent and Moneyback Loan at 7.9 per cent.
At £7,500 the most competitive include ASDA Personal Loan at 6.9 per cent or Tesco and Moneyback at 7.2 per cent.
Highest rates at £5,000 are an eye watering 29.9 per cent with Citi Financial Loan with others charging 13.4 per cent and 16.9 per cent while at £7,500 rates go to between 10.9 per cent and 11.9 per cent at the top end.
* MoneyExpert.com research of its own database on May 13th 2008
**Online Research carried out by YouGov who interviewed 2,051 GB adults (18+) between 28th and 30th April 2008. Grossed up using ONS statistics on no. of households and adults in Great Britain by Citigate Dewe Rogerson.