Last of the low rate loans disappears
According to recent reports the last of the low rate loans available to consumers has now disappeared as a result of four interest rate rises in the space of a year.
Moneyfacts has reported that the only loan of under six percent on its best buy tables, which was offered by Masterloan, has now gone as a result of the latest 0.25 percent interest rate hike. This loan had been available at 5.9 percent, but has now passed through the six percent barrier, with an increased interest rate of 6.1 percent.
According to a spokesperson from Moneyfacts: "With rising bad debts and interest rates, plus economic instability, it is no surprise that rates have been increasing. Our best-buy loans now include rates ranging from 6.1 to 8.9 per cent."
Many lenders have quickly raised the amount of interest that they charge on borrowing following each of the interest rate rises, which took place in August and November of last year, and in January and May of this year – each for 0.25 percent. However, banks and financial institutions have rarely been as quick to apply the interest rate rises to savings accounts.
The four interest rate rises, which have taken the base rate from 4.5 percent last August to 5.5 percent by last month, have caused various problems from consumers.
Homeowners have seen their mortgage repayments shoot up considerably, those with fixed rate mortgages that are due to expire will now be making far higher repayments, and first time buyers now have extortionate repayments to worry about in addition to soaring property prices.
Those looking to borrow money in the form of loans will now have to put up with increased rates of interest. However, those that could benefit from these interest rate rises – that is, consumers with savings accounts – have often been left waiting or have been given a raw deal on increased interest rates.
Tom Smith
19th June 2007
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