Research from Defaqto’s latest banking report reveals that over the past three years, despite the bank base rate falling to a historical low of 0.5%, the average interest rate of an unsecured personal loan has increased from 8.8% in 2007 to 12.9% today.
Kevin Bray, insight analyst for banking at Defaqto, said: “The increasing cost of unsecured lending reflects the lack of appetite for risk in this area with many providers suffering from high arrears and default rates. Additionally the number of providers has reduced by a third since 2007 and of those remaining the focus has been on offering unsecured products to their existing customers.