Brits squeezed by higher personal loan repayments

Borrowers are paying higher and higher premiums on personal loans, despite cuts to the key base rate of interest, it has been claimed.

Since November, the Bank of England has trimmed the key base rate of interest three times to five per cent.

However, research conducted by MoneyExpert.com shows that rather than cutting their rates on loans accordingly, instead lenders have increased the cost of consumer borrowing.

The site claims that rates on personal loans of £5,000 are up by one per cent to 10.16 per cent over the last six months.

Meanwhile, a £7,500 loan now comes with an average rate of 8.88 per cent – up 0.91 per cent.

Sean Gardner at MoneyExpert.com, said: "The Bank has a battle on its hands to restore confidence in the credit markets when lenders react to three rate cuts totalling 0.75 per cent by actually increasing rates.

"The unsecured loans market is almost mirroring the mortgage market where the issue is not so much rates but availability - whether or not lenders will let you have the cash."