Loan suppliers go to war
High street banks Nationwide and Santander have started a price war on loan rates, with the winners set to be consumers, says uSwitch.com, the independent price comparison and switching service.
Earlier this week Santander launched the lowest loan rate on the market at 7.3%, as well as bringing back their £100 current account switching incentive. But Nationwide hit back the very next day with an offer of 7.2%. Tomorrow Santander will re-enter the fray by matching Nationwide's low rate for consumers finding their loans through online comparison sites. If the battle continues, borrowers will are set to gain.
Stefan Maryniak, personal finance expert at uSwitch.com, says: "This is great news for borrowers. It was good for consumers when Santander launched the cheapest loan on the market in two years, and when Nationwide went lower the next day it was even better.
"It is no coincidence that this war on rates is happening just after Christmas when people are revising their finances and looking for some quick win loans. With a rate of 7.2% for borrowing over £7,500 and an equally competitive rate of 8.5% for loans over £5,000, Santander and Nationwide now offer a relatively low cost solution for those struggling with Christmas costs, making a big purchase or wanting to consolidate existing debt. And it's not just the high street banks that are fighting for customers - Tesco and Sainsbury's have also dropped their rates to compete, offering 7.4% on loans over £7,500.
"We would however urge people to think carefully about any borrowing. Consumers should be sure they really need to do it, borrow as little as possible and budget for any repayments. They should make sure a loan is the best product - could a credit card with a good balance transfer offer or introductory offer on new purchases work out better? Barclaycard currently offers 0% on balance transfers for 17 months.
"But if a loan is the best option, taking advantage of the falling interest rates could help set you up for a successful financial year. January is the month in which the banks fight it out to win new lending business so consumers should use it to their advantage by shopping around and, of course, only borrowing responsibly."