Personal loan interest rates increased 'because of lending worries'

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Personal loan interest rates increased 'because of lending worries'

Personal interest rates have gone up because banks are concerned that people will not be able to pay them back, according to an industry commentator.

Jasmine Birtles, founder of moneymagpie.com, claimed banks are "genuinely worried" that people will struggle to afford loan repayments due to the economic climate.

She commented that rates will have also increased because lenders need to make up for losses over the past two years.

Despite the low rate at which banks are borrowing money from the Bank of England, Ms Birtles does not expect personal loan rates to decrease any time soon.

"We're not out of the recession yet. Personally I expect there to be a lot more business closures, a lot more unemployment - and the banks expect that as well," she explained.

She made her remarks following research from Moneyfacts which indicated that half of all personal loan providers have increased their rates in the past six months.

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