Consumers have been warned that they could see interest rates rise on unsecured loans as Payment Protection Insurance loan sales drop.

The principal consultant of banking for financial research website Defaqto.com, David Black, has said that a drop in Payment Protection Insurance sales have left lenders unable to subsidise loans, forcing them to raise interest rates. The finance website also said that more applications from potential borrowers were being turned away as lenders become more discerning about who they give credit to. Nationwide were reportedly rejecting 60% of unsecured loan applicants, and then annual reports of many lenders emphasised that they were focusing on bettering the quality of their business.

During the research, Defaqto compared unsecured rates now to the rates being offered last time the Bank of England’s base rate of interest was at 5%. Earlier this month, the Bank of England’s monetary policy committee voted in the majority to keep the base rate at 5% amidst warnings the UK’s economy could slow down.