Nice Loans.co.uk > News > Cheaper Loans for Banks
The rate at which banks lend money to one another is dropping, meaning cheaper loans for them and eventually their customers.
The interbank lending rate, LIBOR, has now reduced from it's high point recently of 1.25% above the base rate to just 0.6%.
This is an indication that some stability is returning to the lending market in the UK and together with many loans companies repricing or re-organising their product ranges to suit the new conditions, a whole level of self-adjustment is taking place.
The biggest outcome of the situation will be the impact on the potential borrower with a less-than-ideal credit record. These people will find it more difficult to get loans approved and will no doubt need to pay more for any credit they can secure.
Banks and lenders are tightening up the lending criteria on which they approve new loans. This means that conditions that must be met by the borrower for a loan to be approved will be stricter, which in turn means a lower risk for the lender. Conditions like time with current employer, time at current address, monthly income verses outgoings and the history of previous debt repayments all come into play.
In a similar move to the changing conditions in the loans area, Barclaycard also announced that it has reduced limits for half a million of it's credit card customers, again a move aimed at reducing exposure to bad debt.
But for applicants with clean credit histories, the availability of cheap loans seems largely unaffected.
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