Loan Interest rates

dunch1979

Can anyone explain to me why when bank of england interest rates are at a historical low 0.5% are the loan offers from banks still at 8% plus?

is it just me or are the banks just raking in the profit and passing no benefit onto the man in the street?

Cheers

CLAPTON

yes..........

Wutang_2

What about the women?

nomoneytoday

Because you are not a bank borrowing money. The risk of an individual or business defaulting is higher than that of a bank going under, especially since the Government bailed out a number of them last year.

ILW

The banks are now having to pay savers up to 4% or more, to get any money in.

~Brock~

The BofE base rate and the rates for unsecured loans are not really relative.

Regardless of the base rate, unsecured rates were always going to skyrocket due to the following (in no particular order.

• Recession causing greater risk of customers defaulting
• Restricted funding resulting in reduced supply for the product in the first place
• Withdrawal of many non bank lenders reducing competition
• Banning the sale of PPI resulting in big loss of profit margin (whether they admit it or not, PPI used to subsidise the rate)
• Massive insrease in costs of dealing with and defening massive upsurge in claims relating to unenforceability.

I personally cannot see rates coming down for a long time to come, if ever. There is no appetite to lend unsecured except to the very top of the credit score ladder. The days of widely available cheap loans are over I'm afraid.

_Andy_

Not quite sure why people seem outraged at the concept of banks making money.