The figures reveal that loan interest rates have dropped for the first time since August 2008, suggesting that the loan market peaked when the average APR in March hit 8.8 per cent.

The average loan APR has now dropped by 0.2 per cent to 8.6 per cent as, according to moneysupermarket.com, competition is returning to the loan market.

Commenting, Tim Moss, head of loans and debt at moneysupermarket.com said: “At long last competition seems to be returning to the loan market which is great news for consumers. A number of providers have reduced loan rates or launched new, cheaper products, in recent weeks – welcome relief to borrowers.”

Commenting on the recent trend of rising loan rates, he added: “Despite the Bank of England having slashed the base rate over the past six months, loan rates had continued to climb. Banks and Building Societies are more cautious about who they’ll lend to than in pre- credit crunch days, which has made it much harder for consumers to get loans.

“Let’s hope that the rate reductions we’ve seen recently are just the beginning and that we see more providers looking to attract new customers in the months ahead.”

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