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Interest on unsecured loans rising, figures show

Interest on unsecured loans rising, figures show

Category: Loans

Updated: 04/12/2009
First Published: 23/01/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Interest rates on unsecured loans have been rising significantly, it has been found.

Despite the Bank of England's recent base rate cuts, has revealed that some rates have risen by more than three per cent over the past 18 months.

While 8.6 per cent was typically charged for unsecured loans of £5,000 in June 2007, payments have now jumped to an average of 12 per cent.

Analyst at the site Michelle Slade remarked: "Rising unemployment and a declining economic outlook have meant the risk of customers defaulting on unsecured lending has increased. As a result, borrowers are paying a significantly increased rate."

She added that the decision by some lenders to stop selling single premium payment protection insurance (PPI) alongside their products could see even further increases, as these were sometimes used to subsidise lower charges.

This week Barclays, Alliance & Leicester, Lloyds TSB, The Co-operative Bank, NatWest and the Royal Bank of Scotland all announced that they would no longer be offering single premium PPI from the end of this month.

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