"Little prospect" of loan rates falling

There is "little prospect" of loan rates falling, according to one expert.

Commenting on the issue, Pierre Williams, head of research at MoneyExpert.com, said that banks are reluctant to offer consumers cheap deals on credit.

He stated: "Expect to pay a heavy premium in comparison with the 0.5 per cent base rate on any loan you take out. The days of cheap loans are long gone."

Mr Williams added that there is also "some suggestion" that a number of lenders are deliberately attempting to price themselves out of the market because they do not want to lend in light of the risks such activity presents in the recession.

Banks are looking to build healthy margins in order to insure against defaults, which are becoming an increasing threat as unemployment creeps higher.

Figures released recently by moneysupermarket.com revealed that banks are offering an average loan rate of 10.32 per cent, despite the fact that the base rate stands at 0.5 per cent.
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27/08/2009 15:29

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