Competition pushes loan rates down further

A number of lenders across the UK have reduced their personal loan interest rates over the past few months, which has increased affordability when it comes to borrowing in the UK. Most lenders have applied their best rate reductions to loans in the mid-range section, which are generally unsecured loans of between £7500 and £15000.

It has been reported recently that competition in the personal loan sector is resulting in increasingly affordable deals coming onto the market for potential borrowers. The base interest rate in the UK has been standing at just 0.5 percent for twenty two months now, which is the lowest level it has ever been in the history of the Bank of England, which spans well over three centuries.

The increasing competition means that lenders are continually trying to get one over on one another by reducing personal loan rates to make themselves more popular amongst consumers. This is helping to further drive down the interest rates charged on loans, as when one lender reduces the rates the others tend to follow. One lender, M&S, has now reduced the interest rate on its mid-range personal loan to just 6.9 percent, and this is the first time in around two and a half years that it has dropped below the 7 percent barrier.

According to one industry official restrictions are being eased up to some degree, giving consumers access the more affordable deals on the market. He said: ‘At long last, after a period of inactivity, we are starting to see the whole personal loan market starting to open up. Many lenders are beginning to open their books to more consumers and we are seeing more competitive deals, even for loans below £7,500.’

Tags: drive, Affordability, lenders, best rate reductions, rate reductions