Personal loan competition heats up

Lenders are dropping rates on personal loans, off the back of the BoE's interest rate cut last week.

Lenders across the UK are slashing their interest rates on personal loans to compete, following the Bank of England's decision to drop rates by 0.25 per cent.

Ten personal loan providers are currently charging less than six per cent in interest as competition between providers heats up.

"These rate cuts firmly indicate a renaissance in the personal loans market, with renewed competition stirring it back to life," said Stuart Glendinning, director of personal loans at price comparison website moneysupermarket.com.

However, economists are suggesting that the Bank's rate cut could be short lived, with any further competitive reductions between banks cooling by September.

A recent statement from the BoE suggested any further cuts were unlikely, as they may cause inflation to rise above its target percentage.