Low Rate Personal Loans

Why interest rates are likely to rise in 2004

The era of low rate personal loans may be drawing to a close, because economists and politicians are worried that too many UK consumers are borrowing too much money. Last year's small interest rate hike was a warning shot – expect more rises in 2004.

We've never had it so good: last year, the cost of borrowing was lower than it's been for almost fifty years. However, the era of low rate personal loans may be drawing to a close, with most financial experts predicting that interest rates will rise during 2004.
Low rate personal loans are good for consumers, but they can be bad for the economy: if people borrow too much, sooner or later they can get into trouble – which means that the economy can hit the skids. For example if house prices rise too quickly, sooner or later there's a crash which can cause financial misery for homeowners. The Bank of England uses interest rates to stop this from happening: if borrowing is more expensive, people cut their spending.
Experts believe that last year's interest rate hike was a warning shot: we're still spending too much, the numbers of people getting into financial trouble is increasing, and as a result the Bank of England is likely to raise interest rates again in 2004.

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