Low secured loan rates start to match personal loans

Average rates for secured loans are starting to close in on those offered for unsecured personal loans, according to new analysis.

Research from MoneyExpert.com reveals the lowest rate available for a secured loan is currently 5.9 per cent – some 2.5 percentage points below the average personal loan rate of 8.44 per cent on a loan of £15,000.

The cheapest personal loan of £5,000 or more is 6.4 per cent.

The website also reported an 85 per cent increase in interest homeowner loans in the last quarter of 2007 – compared with the previous three months.

It seems as the housing market looks increasingly unstable and the credit crunch starts to bite – many homeowners are looking at staying where they are and turning to their bricks and mortar to raise cash.

Sean Gardner, chief executive of MoneyExpert, said: "Historically secured loans were seen as something of a product of last resort. But these days they are far more attractive to homeowners who are looking for a competitive rate of interest.

"Whilst these low rates can include an arrangement fee of as much as £995, the monthly savings to be made by opting for a homeowner loan can still be substantial."

He went on to explain more people are looking at secured loans, as fears over debts increase and rates fall.

However, taking a secured loan is still as risk – as your home could be lost – and it remains a niche area of lending.

"It's fair to say that the majority of secured loan customers are those who cannot get an unsecured loan. Many are looking to consolidate debts and perhaps they have a poor credit record," Mr Gardner said.

"But that is not to say that a secured loan is inherently bad - home loans can be a lifeline for the applicant, but they should be taken on with a degree of caution."

In particular, borrowers should be aware of lender or broker fees – which may make some deals' low interest rates seem more attractive than they are.
source:http://www.myfinances.co.uk/news/loans/secured-loan/low-secured-loan-rates-start-match-personal-loans-$1209342.htm