According to a recent report many lenders have hiked up the costs of borrowing by far more than the actual rise in interest rates that has been applied by the Bank of England since November of 2007. The Bank of England has raised interest rates fives times between August 2006 and July 2007 with a series of 0.25% hikes taking the rate from 4.5% to 5.75%.
In December of 2007 the Bank of England cut the base rate by 0.25% taking the interest rate back down to 5.5%. However, it seems that consumers have been stung by higher than average rates on their borrowing during this period of interest rate rises.
Moneyexpert.com officials claim that since November 2006 the interest rate on borrowing for many consumers has risen above and beyond the rises in the base rate. Typical loan rates are said to have risen at a rate significantly faster than the base rate irrespective of the amount being borrowed, according to officials. Those borrowing around £3000 have seen the average interest rate rise by over 2.5% since November 2006 even though the base rate only rose by 1.25% between August 2006 and July 2007.
One official from Moneyexpert.com stated: “With the cost of living on the increase, the obvious thing to do for anyone feeling the strain is to borrow money to tide themselves over. But people who want to take out a loan to consolidate debts or to make a large purchase must be wary of the overall cost.”
The figures show that even those borrowing larger sums of money, which usually come with a lower typical APR, have also been hit with above average rates of interest compared to the base rate.
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