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Credit Unions an option for loan seekers

Published: 18/01/2007

Recent interest rate rises may cause people to look to credit unions to take out a loan, the Association of British Credit Unions (ABCUL) has said.

According to the group, last week's decision to raise interest rates by a quarter point to 5.25 per cent, the third time rates have been raised since August 2006, has increased financial pressure on British consumers.

"There is increased pressure on people because of interest rate rises," Sean Bish, spokesperson for ABCUL said.

"People might become a bit wary of taking out loans, and as credit unions offer some of the best loans around then they are more likely to look at us," he added.

Financial pressure may squeeze consumers even more in the coming months, according to stockbrokers Charles Stanley.

Edward Menashy, chief economist at the group, said that interest rates may peak at 5.5 per cent in 2007 before falling back to 4.75 per cent at the end of the year.

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