25 January 2007
The future of the sub-6% APR loan are well and truly numbered following Northern Rock and Liverpool Victoria's decisions to raise their low-rate personal loans.
Northern Rock's personal loan rate has risen from 5.8% APR to 6.1% APR, while Liverpool Victoria's rates have risen from 5.9% to 6.4%.
Alliance and Leicester's Moneyback Bank loans also saw an increase this week which, although it was still under 6%, still saw a 0.2% increase to 5.9% APR – suggesting that low-rate loans are almost definitely on their way out.
Nick White, Financial Services Director at the price comparison and switching website uSwitch.com, commented: "With inflation currently at the highest level in the UK for 15 years, interest rates at their highest since mid-2001 and another base rate increase anticipated in the very near future, it is likely that personal loan rates will start creeping up across the board, possibly resulting in the death of the sub-6% APR loan market."
He continued: "While the personal loans market continues to offer some very competitive deals, consumers that are planning to take out a personal loan in the near future should act sooner rather than later in order to enjoy a sub-6% APR before they disappear completely.
"Consumers should be aware that competitive loan rates are always subject to a credit scoring process and are not guaranteed rates."
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