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Ash4781

Loan Rates Highest In A Decade

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Analysts said banks are raising rates to recoup the losses stemming from people defaulting on their loans.

They suggested banks had previously boosted their revenues by charging for payment protection insurance, but a recent judgment means this is no longer possible.

The average rate on a £5,000 personal loan is 12.7 per cent, according to personal finance website Moneyfacts.

The rise comes despite the Bank of England keeping interest rates at a historic low of 0.5 per cent for more than two years.

Rates were last at their current level in May 2000 when the Bank Rate was a much higher 6 per cent, meaning banks have significantly increased their profit margins on personal loans.

Looks the BOE levers have been rewired. Still if they raise rates the [MPC] assumption seems to be that they'd jack up their rates some more.

But would they or just accept a lower margin?

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When the banks find that the few people left able to service a loan are prepared to pay the interest rates offered, then the loan volumes are only going to drop further.

Next step is banking redundancies (and a big fat bonus of course for the top bods that implement it).

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Analysts said banks are raising rates to recoup the losses stemming from people defaulting on their loans.

Gotta see the irony in that.

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When the banks find that the few people left able to service a loan are prepared to pay the interest rates offered, then the loan volumes are only going to drop further.

Next step is banking redundancies (and a big fat bonus of course for the top bods that implement it).

Interesting, personal loan rates of sub 6% could be readily obtained in the boom years, which is pretty astonishing, and at the other end it was not uncommon to see mid-high teens %ages on shorter loans from mainstream lenders.

I guess a lot of bank staff were paid for by insurance commission alone, so branch redundancies seem the order of the day.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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