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Bank of England no longer controlling Loan Rates

Recent events in the financial markets have caused an unusual effect on the rates of cheap loans. Not so long ago the rates that companies charged on their loans moved largely in line with interest rate changes announced by the Bank of England.

However research by a consumer comparison site shows that rate changes are occuring now outside the movements of the BofE rates. The research found that some loan providers have increased their loan rates by as much as 12 times the most recent rise announced by the central Bank.

The bank announced a rise of 0.25% in July this year but some personal loan providers have increased the rates on their cheapest loans by as much as 3%. These increases apply to a mix of new and existing loans and could cause borrowers some difficulties, particularly as rates were so low originally. Loans increasing by a 3% jump recently are seeing larger increases in repayments than all of the BofE rate increses over the past year combined.

The research also found that rates on online loans were, on average, 1 per cent cheaper than rates for offline loans. That gives further weight to the argument that applying for a loan online is not only quicker and easier but is also cheaper.

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