Moneyback Bank and A&L increase unsecured personal loan rates

Following Moneyback Bank and Alliance and Leicester's increase to unsecured personal loan rates by up to 1.1% APR, Simeon Linstead, Head of Personal Finance at uSwitch.com, comments: "Unsecured personal loan deals continue to rise with two more lenders increasing rates by as much as 1.1% APR today. This pushes the average rate for a £10,000 loan over five years from 8.74% APR to 9.14% APR in just seven weeks.

"In the last three months we have already witnessed the death of sub-7% APR loans with the six providers originally in this segment hiking up rates by as much as 1% APR - Barclaycard, Black Horse, AA, Asda, Moneyback Bank and YourPersonalLoan.co.uk. Hot on the heels of these changes, the latest increases will add further pressure for the nine remaining lenders offering rates below 8% for £10,000 over five years.

"Unsecured personal loans have already taken a nose dive this year with the total amount issued to consumers dropping by a staggering £2.6 billion. People that do successfully secure a deal can expect to pay £1.2 billion more in interest than they did this time last year, making it a really tough market for both lenders and borrowers.

"Going forward, we expect to see more providers increasing loan rates at quite a rapid rate so it's more important now than ever for consumers to shop around. In this volatile credit market, borrowing on a fixed rate loan or consolidating debts can offer borrowers the peace of mind that their interest rate and monthly payments are fixed for the term of the loan. The remaining best buy deals may not be around for much longer so consumers should act now while they can still get some pretty good deals."