Loan rates are set to go through the roof
- 18TH JUNE 2007
Payment protection insurance has been in the news far more than high street banks and lender would like in recent months. As a result of severe negative press, a higher percentage of individuals that may have been interested in taking out protection to cover their debts if they were left unable to pay them are actually declining it instead and leaving themselves vulnerable for the term of their loan.
As a direct result of this, individual banks are counting their losses. Payment protection insurance was a high earner for most banks because it bought in a relatively high percentage of their revenue. Very few people with policies actually made successful claims on their policies and thus the premiums were left untouched in the bank’s coffers.
This loss of profit has forced banks to look elsewhere to bring in revenue. With shareholders to please, the banks have assessed a number of ways in which to raise profits once more and the favourite to take over from payment protection insurance as a good source of income is loan rates.
Loan rates have actually been around the 6% mark but they began to slowly rise just after the turn of the year. They have continuously risen ever since. Payment protection insurance is therefore more necessary than ever because loan rate rises have ensured that repayment terms and amounts have also risen alongside them. Independent payment protection providers, British Insurance, for example, have urged the public to get wise and ensure that they have the necessary protection in place so that the loan rate rises do not leave them financially broken.
