29 November 2006
Following the decision of AA Financial Services to increase its APRs by 0.1% and Northern Rock and Moneyback bank to raise theirs by 0.2% in the last two weeks, the price comparison and switching website uSwitch.com comments on the end of the sub-6% loans.
Nick White, director of financial services at uSwitch.com, stated that he had expected this news for some time.
Commenting on the news of this week's APR increases, Mr White said: "This is a clear signal that we will see these loan rates disappear completely in the not too distant future, to be replaced by less competitive deals."
He continued by saying that the impact of the Office of Fair Trading's (OFT's) investigations into allegations against the unfairness of payment protection insurance (PPI) policies had greatly affected the industry.
"With the impending OFT investigation into PPI, loan providers could lose part of this income stream and will either have to look elsewhere to prop up these low loan rates or increase them to a more profitable level," he explained.
Mr White predicted that other loan providers were likely to follow suit and that consumers considering taking out a loan should strike before the sub-6% APR offers disappeared altogether.
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