Interest On Larger Personal Loans On The Rise

Wed, 15 Jul 2009

Interest rates on large personal loans are increasing according to the Bank of England .

While lenders in the UK have traditionally offered lower rates for bigger loans, figures from the bank suggest providers are starting to change the trend and are now more concerned about limiting the amount of money people borrow as larger loans over a longer period create a greater risk.

The Bank of England yesterday reported that average personal loan rates for a £10,000 loan have increased to 10.32 per cent.

According to financial website Moneyfacts, average best buy rates for loans of £5,000 over three years are currently at 8.77 per cent.

Samantha Owens of moneyfacts.co.uk said: "Rates can now be more if you borrow more. This is so people only borrow what they need."

Donna Earnshaw, loans product manager at the Co-operative Bank, explained that competition in the loans market has died down, with lenders becoming "more cautious" amid the tough economic climate.

She added that the risks for lenders of customers defaulting have increased over the last two years ago.
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