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Lenders are getting tough in the personal loan market
Three-quarters of banks are restricting personal loans to existing customers.
Seven out of the top nine banks that are most active in the personal loan market will only advance money to people who already hold products with them, typically current account customers, according to moneysupermarket.com.
Barclays reserves its best rates for existing customers and accepts very few loan applications from non-customers, leaving only Alliance & Leicester fully open to business for new customers.
Moneysupermarket.com said the more cautious lending strategy being employed by banks was making it increasingly hard for consumers to get personal loans.
It said figures from the British Bankers' Association showed that borrowing through personal loans had dropped by 28 per cent this year.
But it added that searches for loans made through its website were actually 20 per cent higher, suggesting the fall in lending is being driven by a lack of supply and not a lack of demand.
Not only are lenders tightening their lending criteria, but they have also hiked their rates.
The average rate charged on the 10 most competitive loans for someone borrowing 5,000 has risen from 9.24 per cent in January to 10.78 per cent this month, while people looking to borrow 25,000 can now expect to pay 8.71 per cent, up from 8.41 per cent at the beginning of the year.
The most competitive loans are currently being offered by non-banking groups, with Tesco and Sainsbury's Bank currently offering deals of 8.8 per cent on 5,000.
But moneysupermarket.com warned that these providers tended to have the strictest lending criteria, and only people with "unblemished" credit records were likely to succeed with applications.
Tim Moss, head of loans and debt at moneysupermarket. com, said: "The financial crisis may have eased but this hasn't filtered through to the personal loan market yet.
"We have seen the banks go from choosy to almost locking down completely. By restricting loans to existing customers only, banks are able to manage their lending more cautiously.
"We have also seen the average rates for personal loans increase across the board so consumers who are lucky enough to be accepted for a loan have to pay more too."
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Friday 10 February 2012
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