THE AVERAGE rate of interest on a personal loan has rocketed to a ten-year high, the Moneyfacts website revealed yesterday.
A loan of £5,000 costs an average of 12.7 per cent, its research has found.
“In a market where household finances are being stretched the risk of customers not repaying the loan increases and this is passed onto customers through higher loan rates,” Moneyfacts’ Michelle Slade said.
“A few years ago lenders offset low loan rates by recouping revenue through payment protection insurance, but recent judgements mean this is no longer possible.”
Interest rates have not been higher than the current rate since May 2000, when they averaged 13.1 per cent. The figures are not adjusted for inflation, which erodes the value of money.