Cost of personal loan soars

[enaid]

Cost of personal loans soars

The number of personal loans available has halved during the past year, while the cost of taking out one of the products has nearly trebled, research has shown. There are now just 57 different loans available for someone looking to borrow £5,000, down from 105 different deals at the beginning of the year, according to MoneyExpert.com.
At the same time the average cost of one of the loans has surged from 10.65% in January to 29.4% now.
The group said the huge rise was driven by a fall in the number of deals available for single-digit interest rates.
At the start of the year, 74% of loans were charging an annual percentage rate (APR) of 10% or less, but just 31% are now.
There has also been a jump in the number of loans offered to higher-risk borrowers as more providers adopt so-called risk-based pricing, and this has pushed up the average.
At the beginning of the year the highest APR offered on a £5,000 loan was 13.1%, but borrowers with a weak credit rating can now expect to pay between 14% and 24%, with five loans even charging rates of between 50% and 70%.
The spiralling cost of personal loan rates comes despite the Bank of England base rate being cut from 5.5% to 2% since the beginning of the year.
Sean Gardner, chief executive of MoneyExpert.com, said: "With unemployment on the up, lenders are increasingly thinking twice before offering money they're much less sure they'll get back.
"The cost of this risk is being passed on to us all with higher APRs and fewer products available

[natweststaffmember]

Re: Cost of personal loan soars

But the income criteria has changed as well since the beginning of the year. The "free income" criteria has gone up from £450 to £500 in the middle of this year with RBS Group. Most lenders work on what is called risk based pricing. The higher the perceived risk the higher the loan rate.
I am still not sure what they are talking about, when they say the number of loans available, they need to explain what they mean? Do they mean lenders have stopped lending money? Do they mean the average number of loans approved has gone down? Do they mean that with the mergers of various institutions that that has factored into the equation?
What do they actually mean by loan? Is it fixed rate, bridging loan, variable loans, graduate loans or something else?
Minutiae is key, because statistically we can suggest something will all figures given.
------------------------------- merged -------------------------------
Furthermore, lending rates would be lower at the beginning of the year than at the end of the year as focus switches throughout the year.