Borrowers topping up mortgage with personal loans
Research from MoneySuperMarket suggests 16% of personal loan enquiries on its site were based on property.
This was followed by business reasons, which made up 10% of enquiries, while education and transport made up 9% respectively.
Kevin Mountford, head of banking at MoneySuperMarket, said: “Lenders have slashed personal loan rates in recent years, and we’re still continuing to see them fall now, with a notable drop in the average rate over the last month.
“It’s especially interesting to see such drastic rate reductions in the larger loans bracket where rates now mirror those on offer in the medium loan size category.
Banks are willing and able to lend money at the moment and the reduction in these larger loan rates for those borrowing between £15,001 and £19,999 is a good indicator that lenders are looking to entice those looking for a large level of borrowing, who in the past may have opted to remortgage for those amounts due to the lower rates on offer.
“They now have the choice to do this without the lengthy process of obtaining a mortgage which is secured on their property.”
Average personal loan rates for both £5,000 and £7,500 have plummeted to their lowest ever level -since the start of the year rates have steadily decreased and the average APR on loans of £5,000 over five years is currently 6.05% – a drop of 21% since January’s average of 7.63%.
The most significant fall came just this month as the average rate in July was as much as 7.34%.