Low rate loan becoming a thing of the past
With interest rates having risen four times already in the space of a year, and with further rises predicted for the summer, consumers in the UK are having a hard time trying to find an affordable loan. And according to recent reports the availability of a loan charging under 6 percent has now disappeared after Masterloan hiked up its rates along with the last interest rate rise. The loan interest rate rose to 6.1 percent from 5.9 percent after last month's interest rate rise.
Interest rate rises have taken their toll on borrowers in the UK over the past year after rising by 0.25 percent four times, in August and November of last year, and in January and May of this year. It is thought that the Bank of England's Monetary Policy Committee will be raising interest rates again by at least a further 0.25 percent in July, and analysts state that there could be further rises due later in the summer. So far the interest rate has risen by a full one percent since last August, and it looks as though future predictions could spell bad news for borrowers.
Another issue that has been facing consumers is that the banks have generally applied any interest rate rises very quickly to borrowing, so those that owe money see their repayments go up very quickly. However, when it comes to savings accounts banks have been far slower to take action with regards to raising interest rates, and in some cases have not applied the interest rate at all, which means savers get a raw deal. One Moneyfacts official stated: "With rising bad debts and interest rates, plus economic instability, it is no surprise that rates have been increasing. Our best-buy loans now include rates ranging from 6.1 to 8.9 per cent."
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