Debt consolidations may rise as lenders increase loan rates

A total of 14 money lenders have increased their loan rates in the past month, it has been revealed, while two lenders have pushed their rates up on two occasions.

The statistics, from Moneyfacts, show AA and Tesco Personal Finance customers have seen rates increase twice in the last month.

Abbey pushed rates up the highest amount, by five per cent.

“Family finances continue to be stretched, causing many to consider consolidating existing debts into one loan as a means of reducing monthly outgoings,” said the finance information provider.

It added people looking for debt consolidation products should “shop around” for the cheapest option. It also warned those considering payment protection insurance that “the lowest rate doesn’t always equal the cheapest loan”.

Moneyback Bank was the only lender to reduce rates, according to the figures, by 0.20 per cent.

Also in finance news this week, British Gas customers will see a 35 per cent increase in their gas bills.

By Morwenna Kearns