Fewer personal loans available from unsecured lenders
According to a recent report there are now fewer personal loans available from unsecured lenders in the UK. The information comes from financial experts Moneyfacts, which has described the situation as a 'worrying trend'. According to figures there was a 10% fall in the number of unsecured personal loan providers throughout the month of November. Increased cash flow problems and financial turmoil in the money markets has really taken its toll on many lenders.
One lender, Eskimo Loans, which is a lenders that is funded by stricken bank Northern Rock, recently confirmed that it was withdrawing its loan products with immediate effect. The drop in personal loan availability has been blamed on higher interest rates, increased loan defaults, and the effects of the credit crunch that was sparked in the sub-prime sector of the United States and has spread across the Atlantic to the UK and other countries, wreaking havoc in its path.
Over the past few weeks a number of other lenders have stopped offering unsecured personal loans, and this includes Liverpool Victoria (LV), the Leeds Building Society, and GE Finance. There have also been reductions in product availability amongst secured lenders according to Moneyfacts officials.
Esther James, personal finance analyst at Moneyfacts, stated: "Such a large reduction in just the last month is worrying. With no signs of rate rises slowing, it's a rather unsettled market. The credit crunch is showing its strength in the personal loan market."
Officials also stated that even lenders that were continuing with these financial products were operating more stringent lending criteria and had hiked up interest rates. This includes rates on personal loans, credit cards, and other forms of finance, where lenders are trying to recoup financial losses and protect themselves from further losses.