Cost of loans rising, research finds

The cost of borrowing via an unsecured loan is increasing, new research from uSwitch has revealed.

Despite three consecutive cuts to the base rate of interest by the Bank of England in recent months, the website found that the average interest rate offered by lenders on an unsecured loan has risen from 9.31 per cent in October, to 9.44 per cent.

There are now no unsecured loans available with an interest rate lower than eight per cent, uSwitch discovered.

People looking for debt consolidation solutions are struggling in the current climate, personal finance manager at uSwitch.com Louise Bond stated.

She said: “The current economic climate is still unpredictable and the cuts by the Bank of England are not being felt by people looking to take out a personal loan.”

The number of unsecured loans agreed by lenders has dropped by a quarter compared to the same time last year, the comparison website added.

Meanwhile, growing number of people are paying for Christmas presents on their credit cards, research from MoneyExpert has revealed.

By Rosie Park