A recent report has shown how the interest rates on unsecured personal loans for fairly modest amounts of money have gone up over the last year, despite two recent cuts in the base rate. The interest rates charged on smaller personal unsecured loans have gone up in the past couple of months alone, with rates on loans of £1000 taken over three years having gone up by 1.6% since January.

Although the rates on smaller loans have gone up since January, the interest rates attached to larger loans, such as those for around £20,000, have fallen slightly since January. However, since this time last year rates on most personal loans have risen, and are significantly higher now despite the fact that the base interest rate are at the same level now as they were one year ago.

Industry experts have stated that the most competitive deals on unsecured personal loans are now only available to those with very good credit, and fewer and fewer lenders are offering competitive rates on these loans. One industry official stated: ‘The ongoing credit crisis has seen institutions concentrating on getting money in the door and becoming more expensive and selective when lending money out.’

Reports and figures show that loans of around £2000, and £3000 have gone up by around 4% since this time last year, so borrowers that are only borrowing relatively small sums of money are paying considerably more than they were paying this time last year. Although the rate on larger loans has come down slightly since January the rates are still around 1% higher than this time last year on loans of around £20,000.

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