Borrowers ‘being squeezed’

Borrowers across the UK are being squeezed as interest rates are increased by many of the most popular lenders, it has been claimed.

Figures compiled by MoneyExpert.com show that the average borrowing rate on an unsecured loan of around £5,000 rose considerably in recent months and now stands at close to 9.5 per cent.

According to the financial comparison firm, credit consumers who borrow the smallest amounts are finding debt management most difficult as lenders up the interest rates on these deals most sharply.

“Borrowers are feeling the pinch with those wanting to borrow less getting squeezed the most,” said Sean Gardner, chief executive of MoneyExpert.com.

“Lenders take the view that those borrowing more are in general a better risk than those borrowing less and offer better rates as a consequence,” he added.

During the third quarter of this year, close to 16,000 people in England and Wales entered bankruptcy by way of a debt solution, according to official figures from the Insolvency Service.