Earlier this week two major
lenders lowered their
personal loan interest rates, starting an
interest rates war.
Out of all the lenders in the market, ten personal
loan providers are now charging less than six per cent interest, a clear indication that competition between providers has increased.
Stuart Glendinning, director of
personal loans at moneysupermarket.com said "These rate cuts firmly indicate a renaissance in the personal
loans market, with renewed competition stirring it back to life. In this environment of lowering interest rates, if consumers are looking to
borrow,
apply for a loan, or
consolidate debts, now is the time to do it cheaply"
Moves this week in the market saw
Abbey and
Northern Rock lower their interest charges to 5.7 per cent and 5.6 per cent respectively. These companies are now offering the cheapest deals on the market.
Michael Johnson, Abbey's director of
banking, said: "We are keen to offer customers a good deal even when they're not
borrowing a huge sum of money. In offering our lowest rates on loans as small as £5,000, this will enable people to get affordable loans for smaller purchases or projects without paying high interest rates."
Moneysupermarket's Mr Glendinning noted: "Abbey has reduced its rate twice in the last few weeks; first from 6.4 per cent (online loan) to 5.9 per cent
APR, and down to 5.7 per cent APR yesterday. In addition, A&L recently launched a new Moneybank
Bank loan with an attractive headline rate of 5.7 per cent APR."
But according to moneysupermarket the reduction made by Northern Rock is leading the way.
Mr Glendinning observed "The most eye-catching change is from Northern Rock who has cut its rate to 5.6 per cent APR, offering the lowest deal in the market."
While the competition is good news for customers, he has a warning for the unwary as rates may look attractive, they might not be open to all.
"Consumers need to be mindful that higher
bad debt provisions made by the
banks and thus, more stringent underwriting, means that customers with an excellent
credit profile are likely to benefit the most. Other customers with a slightly poorer profile may find it more difficult to achieve market-leading loans now, than would have been the case 12 months ago."
