To put this into perspective, a year ago the gap between the average loan and base rate was a more manageable 3.4%. In addition, a number of lenders are restricting their best deals for existing customers only.
Even worse, those looking for loans of £5,000 are being stung the hardest. Those looking for a loan of £10,000 can expect to pay nearly 2% less, whilst in August 2005, the difference between a £10,000 and £5,000 loan was only 0.15%.
Tim Moss, head of loans and debt at moneysupermarket.com said: "Despite the Bank of England slashing base rate to 0.5% in March, loan rates have continued to rise, leaving consumers paying through the nose for their personal loans. Borrowers looking for a smaller loan of around £5,000 will be hit harder than those looking to borrow more.
"We have seen a recent glimmer of hope as loan rates crept down slightly in August. Competition seems to be returning to the loan market which is great news for consumers; however lenders will need to continue reducing rates if they want to draw customers back, particularly those who want to reconsolidate their debt.”
