Personal loan rates are creeping up following a period where some of the best rates were even lower than mortgage rates.
Personal loans – sometimes called “unsecured loans” because they are not tied to the borrower’s property – are generally used for car purchases, home improvements such as conservatories or to consolidate credit card debts.
The best rates fell sharply following the financial crisis, but they tended to be offered only to borrowers with the best credit histories.
At the end of 2016 personal loan rates dipped below 3pc for the first time when Sainsbury’s Bank introduced a new loan that charged just 2.9pc.
Following the rise of the Bank Rate on November 2, 2017, from 0.25pc to 0.5pc, experts warn these sub 3pc loans are disappearing.
On November 1 the rates of the cheapest personal loans were between 2.8pc and 2.9pc.
Today the four most competitive providers, M&S Bank, Sainsbury’s Bank, TSB and Clydesdale/Yorkshire Bank, have increased their rates by an average of 0.35 percentage points for those borrowing £10,000 or more, according to analysis by Moneycomms, the personal finance site.