Loan interest rates - why still so low?

Nailer99

I’ve recently taken out a £15000 loan for home improvements. The interest rate is 2.8%. 

The last time I took out a similar-sized loan, Bank of England interest rates were near zero, and the rate of that loan (the best rate at the time recommended by Martin Lewis’s site) was exactly the same - 2.8%!

Mortgage rates seem to have shot up with the recent BoE rate rises. Why have loans not?

Jami74

danb77_2 said:

I’ve recently taken out a £15000 loan for home improvements. The interest rate is 2.8%. 

Always good to hear from someone that actually got the advertised rate, most people post on this forum saying they expected to get the representative APR but actually got much higher. You must have an excellent credit history and be considered low risk by your lender.

ab1234567890abcdefgh

Simply put, the current level is in line with historical norms for the banks cut vs base rate.

In 2007 the average interest rate for a loan was 6.72 vs a base rate of 5.75.  And that was the average, not the lowest.

If anything, banks were taking the mickey during COVID, but obviously there was a higher risk factor to consider.

I suspect another interest rate increase will get rid of the 2.8% deals.

MrFrugalFever

That is very low, you could almost max out the loan to most they’ll pay out under 2.8% and stick in a higher rated fixed term savings account for same term and actually earn more than what you’ve paid back in the loan!

[Deleted User]

Jami74 said:

danb77_2 said:

I’ve recently taken out a £15000 loan for home improvements. The interest rate is 2.8%. 

Always good to hear from someone that actually got the advertised rate, most people post on this forum saying they expected to get the representative APR but actually got much higher. You must have an excellent credit history and be considered low risk by your lender.

Most people (at least 51% to be exact) get the representative rate, they just don't post on here because they applied and got what they wanted. People post on here because they don't read the basics and don't understand that no-one is guaranteed the headline rate and logically, 49% or so won't get that.