Rate Watch: the best rates for personal loans, cash ISAs and mortgages

By Lorna Bourke
09:35:24 27 March 2008

Lorna Bourke's Rate Watch scans the markets for the deals that offer great rates and make the most sense for most people.

All offers are independently handpicked by Lorna Bourke and neither she nor Citywire receive any form of commission or kickback for the selections.

It isn’t just mortgage borrowers who are suffering. Credit is tightening across the board and only those with triple A credit ratings will be able to borrow at the cheapest rates on personal loans.

Moneyfacts, which monitors all financial products, is highlighting the fact that the best personal loans are now considerably more expensive than a year ago with an average rate increase of 1.7% making the cost of a £5,000 loan over three years now around £300 more expensive. For example, the total cost of a three year £5,000 personal loan from Black Horse (Lloyds TSB) has gone up from £5,927 to £6,312 – an increase of £385 pounds.

‘In 2008 alone we have seen 27 changes to personal loan products,’ says Samantha Owens, head of personal finance ‘In the majority of cases, these have been increases across the board. Traditionally the more you borrow on a personal loan the lower the APR. More recently however, we have seen lenders increasing the rate offered on the higher loans.’

‘Over the last year we have seen lenders reassessing how they offer personal loans too, with more and more lenders adopting personal pricing or a credit rating assessment. This is not necessarily bad news for the borrower. Whereas before a prospective borrower was either accepted or declined, now those lenders that offer an APR dependent on a credit rating will offer an alternative rate to those borrowers who otherwise could have been declined,’ Owens explains.