Low-rate loans lost

The last loan charging less than six per cent interest has finally disappeared following the fourth interest rate rise since last August.

Since March, Masterloan had been the only provider on Moneyfacts website’s best buy list offering the low rate loans. However, last week, its rates jumped up from 5.9 per cent to 6.1 per cent.

Michelle Slade of Moneyfacts told the Independent newspaper: “With rising bad debts and interest rates, plus economic instability, it is no surprise that rates have been increasing.”

She added: “Our best-buy loans now include rates ranging from 6.1 to 8.9 per cent.”

Moneyback Bank currently offers the lowest rate at 6.1 per cent but with a shortage of cheap loans around, the Nationwide building society’s 8.9 per cent rate also makes it into the best buy list.

While the Moneyback Bank’s best offer is above the six per cent mark, it still only represents a 0.6 per cent margin for the lender.

At the same time, banks are coming under pressure to raise the interest they pay on savings accounts.