Cheap loans customers 'should move fast' to pay off debts
Britons possessing or considering taking out short-term cheap loans should be aware that interest rates are set for rapid increases this year, according to one expert.
Britons looking to take out cheap loans should be aware that low interest rates may not last for much longer, it was suggested yesterday (January 13th).Writing for the Independent, Hamish McRae claimed that it is "utterly abnormal" to prevent savers from making substantial returns with the current 0.5 per cent base rate.
He suggested that the Bank of England will increase the rate for the first time in the summer, which will be the first of a number of rapid rises in the ensuing months.
As a result, Mr McRae advised consumers who are planning to take out a short-term loan to move quickly and attempt to pay it off while credit is still relatively cheap.
"Any person or company that is likely to be relying on borrowing should be aware that the present era of cheap money will soon be over," he wrote.
"Even if the Bank of England manages to hold down short-term rates for a while, it cannot hold down long-term ones.
"So they should do their sums on the basis that they may have to pay more, maybe quite a lot more, for funds."
Mr McRae also explained that the rate at which interest rates rise will be largely influenced by the financial credibility of the government following this year's general election.
Meanwhile, a slightly different view has been put forward this week by Alan Clarke, an economist at BNP Paribas, who suggested that the Bank will not implement sizeable interest rate hikes until "late 2011".
Written by Tobias Bluth
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