Interest rates on loans and credit cards 'have been falling'

By Joel Stanier

Interest rates on credit cards and new personal loans fell in the three months to November, figures from the Bank of England show - meaning it was cheaper for people to borrow money than in previous months.

But lenders who contributed to the research commented that recent higher costs of funding for consumer credit had not yet been passed onto pricing - indicating that interest rates could rise in the near future.

The Trends in Lending report for the final quarter of 2011 also showed that the level of consumer lending was increasing, but remained subdued as many consumers looked to improve their financial situation. Meanwhile, the rate of personal insolvencies in England and Wales fell slightly.

Commenting on forecasts for secured lending (e.g. mortgages), the report said: "lenders expect the availability of secured credit to households to increase slightly in 2021 Q1, with the rise concentrated on borrowers with high LTV [loan-to-value] ratios". That means borrowers with a small deposit may find it easier to get a mortgage than in the recent past.

The report also gave an insight into borrowing for businesses. Small businesses have continued to struggle to get credit, it said, although lending to businesses overall increased slightly.

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Tags: Interest rates, credit cards, loans, Bank of England

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