Banks Restrict Lending And Increase Personal Loan Costs

Thu, 17 Dec 2009

Consumers looking to take out a loan could find it increasingly difficult as banks tighten their lending criteria, increase the cost of personal loans and limit the best deals to existing customers.

According to price comparison site Moneysupermarket.com, the average rate of a best buy £5,000 loan has risen by 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates remaining at just 0.5 per cent.

Research by the group also revealed that eight out of nine high street lenders have restricted their loan offerings to existing customers, typically those who hold a current account .

Tim Moss, head of loans and debt at Moneysupermarket.com, said: "The financial crisis may have eased but this hasn’t filtered through to the personal loan market yet."

"We have seen the banks go from choosy to almost locking down completely. By restricting loans to existing customers only, banks are able to manage their lending more cautiously."

"Luckily, there are players who are filling the void with the likes of Alliance and Leicester, Tesco, Sainsburys and the Post Office offering competitively-priced personal loans ."

Moneysupermarket said that while the number of people searching for a loan using its services has increased by 20 per cent since the end of last year, figures from the British Bankers’ Association showed that borrowing through personal loans has dropped by 28 per cent over the same period.

"It is quite clear that the fall in this kind of lending is almost entirely down to a lack of supply," added Moss.
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.

Credit Crunch Savers
HSA Dental Plan
Get covered from £7.70 per month!
Amex Cash Back
Credit Card
Get 5% cash back on purchases with Amex
Income Protection Insurance
Get an instant quote with the award winning company