It remains anyone’s guess as to when interest rates will rise, but consumers who are planning to use unsecured credit are being urged to take action now.
The average rate for mid-sized loans has nearly halved since the start of the year, and this news comes as providers continue to fight amongst themselves to provide the most competitive credit-card deals, too.
“It’s good news all round for many borrowers at the moment,” said Kevin Mountford, of Moneysupermarket.com, which carried out the analysis.
“Providers are vying to be top dog in the credit-card and loan markets, meaning that deals are being extended and rates are being reduced in order to attract customers.
“However, with Bank of England governor Mark Carney recently signalling that base rate will rise sooner rather than later, the era of cheap borrowing may be coming to an end. Consumers should act now to make the most of the current deals before they disappear.”
People looking to borrow £7,500 over five years were being offered an average interest rate of 10.16% in January, but since then the average rate has plummeted to just over 5.5%. Meanwhile, the average rate for loans of £5,000 was just shy of 15% at the start of 2014, but it has since fallen to about 8%.
Just because rates are low, it doesn’t mean you should borrow if you don’t need to. Never forget that anything you borrow will need to be paid back regardless of the interest rate – low rates don’t mean “no rates”.
It’s also worth remembering that the best rates are usually available only for borrowers with good credit histories. If your record is not spotless, you should expect to be offered a higher rate.