Banks 'forced' to raise personal loan rates

Personal loan rates are rising as the banks attempt to shore up the losses they have made over the last two years, it has been claimed.

According to journalist and author Jasmine Birtles, the founder of moneymagpie.com, financial institutions have made such losses that they now have no choice but to "pocket the difference" from the low Libor and Bank of England base rate.

In addition, she said the banks are "genuinely worried" about consumer debt levels and their ability to pay back what they owe.

Ms Birtles added: "It's possible and highly likely that even if their own rates of borrowing were higher, then the rates at which they were lending to us would be even higher than this.

"As we found out last week, we're not out of the recession yet," she claimed, referring to the latest gross domestic product figures published by the Office for National Statistics."

Last week, the Citizens Advice Bureau urged people with money problems to seek free debt advice before they spiral out of control.

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2009-10-28 15:37:51 © Moneyextra.com