Borrowers Take Advantage of Low Interest Rates to Increase Repayments
April 30, 2010 | Posted by admin New figures have revealed that more people are repaying loans than are applying for fresh credit.– as were those with personal loans.
Fresh figures from the British Bankers Association (BBA) show that the amount of applications for new loans is being outstripped by the sums going towards repayment.
The BBA said that the situation was down to low interest rates combined with the tougher lending criteria applied by most banks, which is incentivising the swifter repayment of outstanding debt.
The association’s director of statistics David Dooks said that UK interest rates were enjoying a relatively stable period at low levels. Homeowners in particular were using this period to increase the level and frequency of their repayments
He noted that lenders were themselves urging people with mortgages to use any extra money in their budgets as a result of interest rates to reduce the amount of their debt. Mr Dooks told the BBC that “homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates.”
He also pointed out that this was the case among borrowers who had previously taken out unsecured personal loans.
Mr Dooks added: “People are also holding more cash in their everyday accounts, rather than building up savings accounts and overall unsecured borrowing levels are standing still.”
He conceded that the latest figures also revealed a minor increase in levels of spending on credit cards, but stressed that the amounts involved were smaller than in previous years.
Although personal loans are harder to come by than pre-credit crunch, there are still many good deals to be found online. The use of a good financial directory will help point any potential borrowers in the direction of the best loans available.
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