The average rate at which banks lend to each other – has fallen below 1% for the first time since 1986, prompting hopes for cuts in interest rates on personal loans and other forms of credit. Traditionally, the LIBOR rate has been used by many banks and building societies to set the interest rates they offer to consumers.

When LIBOR falls, it effectively means that the cost of funding loans, mortgages and other forms of credit is lower. A loans expert for Think Money said: “Even though LIBOR has been mostly falling in recent weeks, some lenders have actually upped some of their interest rates. Borrowers will hope that lenders begin to cut loan rates in the near future.

“In the meantime, it is still possible to get a good deal on a loan – it might just take a little longer than it may have done in the past. Anyone who is unsure about where to find the best rate should speak with an expert loans adviser.”