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Published: 11/12/2018

Those looking to consolidate their debts – or perhaps recover from the spending frenzy of the festive period – may be disappointed to learn that average loan rates are beginning to rise. Indeed, our latest data shows that rates have increased on all tiers from £2,000 to £25,000 during the last quarter – so much so that the £7,500 tier has hit its highest point in two years.

The figures, taken from the latest Moneyfacts UK Treasury Report (Unsecured Personal Loans, Credit Cards and Overdrafts), highlight the general uptick across the market. The average rate for a £5,000 loan over three years, for example, has risen from 6.7% APR in October to 6.8% APR today, while an average loan of £7,500 over five years will now charge 4.8% (up from 4.6%), and a £25,000 loan over the same period has an average rate of 5%, up 0.1% during the quarter.

"Gone are the record-low rates of unsecured personal loans, as rates have moved in an upward trajectory during the past quarter across the majority of tiers," said Rachel Springall, finance expert at Moneyfacts. "For example, the average rate of a £7,500 loan over five years – the tier most typically advertised – has hit its highest level since 2016, standing at 4.8% this month."

But why could rates now be on the up? Lots of it could be due to external factors, with the risk of economic uncertainty likely putting pressure on providers to rethink their pricing. "Loan rates were pushed to their lowest levels in 2017, so it was only a matter of time before external factors crept in to stir up the market," explained Rachel.

Unfortunately, it hasn't come at a great time for consumers. After all, we're coming to the time of year when consumers face a rise in household expenses, and many could be looking to consolidate their debts in the New Year as a result. It's also worth pointing out that only 51% of successful applicants need to be offered the advertised APR, which means the rate seen at first glance is not guaranteed to be the rate offered to customers when they apply – which means actual rates for nearly half of applicants could already be higher.

That said, although rates are on the rise, "there are still some good deals to be had within the Best Buys, so borrowers thinking about consolidating their debts shouldn't be too disheartened," concluded Rachel. "For example, cahoot currently offers the lowest loan rate of 2.8% on £7,500 borrowing over five years, but there is no telling how soon the lowest deals could breach 3% going into 2019."

This means that, if you're already thinking of taking out a loan, now might be a good time to take the plunge – before rates have a chance to rise any more. Just make sure you can comfortably afford the repayments and always ensure your credit score is up to scratch before you apply, and use our loan calculator to find the best deals for your needs.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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