Base rate down to 2% but unsecured loans cost more
by Gill Montia
The Bank of England’s Monetary Policy Committee (MPC) has cut the base rate by 1% today, taking it down to a 57-year low of 2%.
The cut was widely predicted and followed a 1.5% reduction in November, since when ministers have upped their pressure on mortgage lenders to pass on the full extent of rate cuts to homeowners.
Lloyds TSB and subsidiary Cheltenham & Gloucester have already pledged to pass on today’s base rate reduction in full, to existing customers with variable and tracker rate loans.
While other mortgage lenders may still be considering their positions, it would appear that at least two providers of unsecured loans, which are commonly used to consolidate debt, have pre-empted the MPC’s decision by increasing rates hours before the announcement was made.
According to MoneyExpert.com, Lombard Direct raised the rate on one of its most competitive loans from 7.8% to 8.3% (for an unsecured loan of £7,500), while AA Loans hiked one rate from 8.5% to 9.4%, for a similar sum.
According to the price comparison website’s direction, Sean Gardner, the Government is failing to take note of the fact that the unsecured loan industry has continued to increase costs, despite record cuts in the base rate.
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