‘Personal loan applications falling as rates rise’

According to Stuart Glendinning, managing director of Moneysupermarket, the number of personal loan applications has gone down in recent weeks as the higher cost of borrowing diminishes consumer appetite for unsecured credit.

He also said that the availability of very cheap loans is in decline as more and more lenders push up rates to reflect changes in the Bank of England base rate.

Furthermore, negative media coverage on the issue of payment protection insurance and a regulatory crackdown on firms that mis-sell the product will ultimately lead to higher costs for consumers.

“It is still the case that a lot of loan providers are relying on PPI sales as the means of making the products profitable,” he commented.

“I think the industry probably is bracing itself for a tightening in the way it sells PPI which is going to reduce the PPI sales penetration and therefore that should have the effect of pushing rates up further.”

Earlier this week, the Office of Fair Trading said it was referring the UK PPI industry to the Competition Commission.