People looking for a consolidation loan to clear debt may be in for a shock this month, following reports that rates have hit their highest levels in six years.
Moneyfacts’ study of personal loan rates found the cheapest deal on the market this month is from Moneyback Bank, which offers a rate of 7.6 per cent on a £15,000 loan over three years.
This rate has risen from 6.3 per cent in 2007 and 5.6 per cent in 2006 – again, the cheapest loans on the market.
Independent finance information provider Moneyfacts said people could be paying much higher rates if they are going straight to their banks rather than shopping around.
“This is extremely bad news for consumers who may be considering consolidating existing debts to try to drive down their monthly expenditure,” said the service.
In other news, homeowners thinking of remortgaging may be interested in a new offset deal announced by First Direct.
By Morwenna Kearns