Eight of the top nine UK bank lenders are currently ‘battening down the hatches’ and considering loan applications only from existing customers, according to new research*.
Loans are most readily available to existing current account customers and this ‘lender reluctance’ is the latest symptom of how banks continue to tighten up on loan availability in the current unfavourable climate.
Those loans that are available are more expensive, with the average on the 10 most competitive loans, based on a borrowing of £5,000, now at 10.78%, up from 9.24% at the start of the year.
While the British Bankers’ Association reported a fall in loan borrowing of 28% this year, moneysupermarket noted that online searches for loans were up by 20%.
“Whilst more people are looking for a loan, fewer are getting one,†said moneysupermarket in its report.
“It is quite clear that the fall in this kind of lending is almost entirely down to a lack of supply. We have also seen the average rates for personal loans increase across the board, so consumers who are lucky enough to be accepted for a loan have to pay more too,†said moneysupermarket’s head of loans, Tim Moss.
“The financial crisis may have eased, but this hasn’t filtered through to the personal loan market yet. We have seen the banks go from choosy to almost locking down completely.â€
In shopping for loans, consumers should note that the loan rate, or APR, quoted by a lender may not be the rate available to all applicants. It is therefore crucial that borrowers look closely at the terms and conditions of any loan offer they receive.
*Source: moneysupermarket.com
