After falling to record-breaking lows at the start of the COVID-19 pandemic in 2020, personal loan rates are predicted to remain low in 2022. The Federal Reserve slashed interest rates in March of 2020 and kept the benchmark federal funds rate near 0 percent in 2021. The Federal Open Market Committee (FMOC) has projected this rate will not increase until 2023.
Personal loan rates should remain stable in 2022
Personal loan rates remained stably low throughout 2021 and are not projected to change much in 2022. “Rates have pretty much been at a standstill, but instances of lenders adding or restricting their offering have been the main dynamic in place. The average rate has fallen, not because rates have fallen ironically, but because we’ve seen some uncompetitive offerings go away,” says Greg McBride, CFA, Bankrate chief financial analyst.
Since the Federal Reserve has decided to keep interest rates low, the interest rate for personal loans should remain stable. “With the Fed on the sidelines, there is no catalyst for any widespread movement in rates,” McBride says.
As of the end of January 2022, the average personal loan interest rate is 10.28 percent, although lenders offer rates anywhere from 3 percent to 36 percent.
Lenders could ease their lending standards as the economy recovers
Due to COVID-19’s negative impact on our economy, some lenders responded by tightening their lending standards, making it harder for some borrowers to get approved for personal loans. If you had trouble qualifying for a personal loan in 2021, a lender may be more willing to lend you money as the economy recovers. “If anything, I expect terms might ease and lenders looking to grow will expand the borrowers they’re willing to lend to given the strengthening economy and growing job market,” McBride says.