Personal loan rates on downward trend
Marks & Spencer Money is offering borrowers a personal loan at a rate of just 6 per cent.
This represents the lowest rate since 2008 when Moneyback Bank was offering 5.8 per cent, while just one year ago Tesco Bank offered the lowest loan rate, of 8.4 per cent.
Marks & Spencer Money’s 6% deal is for personal, unsecured loans of between £7,500 and £15,000 for a period of one to five years.
Tesco Bank is not too far behind M&S Money after cutting its rate from 6.4 per cent to 6.1 per cent on loans of between £7,500 and £15,000 with a term of between one and ten years.
Yesterday the Co-operative Bank cut rates on all of its personal loans by one per cent for existing customers who hold Privilege and Privilege premier account holders.
This means that these customers can now borrow between £7,500 and £14,999 at 6.9 per cent, while the interest rate on loans between £15,000 and £25,000 has been cut from 8.9 per cent to 7.9 per cent.
Personal loan rates have been on a downward trend since the start of the New Year, with Santander and Barclays also announcing lower rates.
In related news the Bank of England has revealed that it expects UK banks to toughen their loan terms for both individuals and businesses because of difficulties in wholesale funding markets and the uncertain economic outlook.
In its fourth-quarter Credit Conditions Survey the Bank of England suggested that lenders would introduce more stringent credit-scoring criteria for mortgage applications and tighten covenants on business loans.
This means that homebuyers, who already struggling to raise the large deposits demanded by lenders, are likely to find it even more difficult to secure a mortgage in the coming months.
The supply of mortgages has plummeted since the onset of the international banking crisis in 2007.
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