Unsecured loan rates have risen, despite the base rate remaining at 0.5 per cent for more than a year, research from Defaqto has found.
The independent financial research company has highlighted that while the base rate has been languishing at an all-time low, the cost of unsecured loans has continued to rise.
Since the start of the financial crisis in 2007 and through the recession, the average loan rate has risen from 8.8 per cent to 12.9 per cent today, irrespective of the fact that the base rate has fallen from highs of 5.5 per cent in 2007.
Commenting on the findings, Kevin Bray, insight analyst for banking at Defaqto said, "The increasing cost of unsecured lending reflects the lack of appetite for risk in this area with many providers suffering from high arrears and default rates."
Mr Bray added that one contributing factor to the increase in rates could be the fall in numbers of lenders in the loan market, which has fallen by a third since 2007, "and of those remaining the focus has been on offering unsecured products to their existing customers," he said.
© Fair Investment Company Ltd
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