Rates for borrowers of unsecured personal loans have increased by 44 per cent in two years, it has been claimed, something that could lead to people needing a debt solution in the future.
Moneyfacts stated that rates for loans of £5,000 have risen from 8.6 per cent in May 2008 to 12.4 per cent a year later.
Spokesperson Michelle Slade said that customers have experienced a “staggering jump” in prices for the financial products.
“Rising unemployment has meant the risk of customers defaulting on unsecured loans has increased and this increased risk is being seen in higher rates,” she explained.
Ms Slade warned that people struggling with debts are more likely to default on unsecured lending rather than secured forms of borrowing such as mortgages.
However, ClearDebt recently advised consumers to focus repayment efforts on more expensive products like credit cards, while meeting minimum amounts on other debts.
By Jamie Price