July 30 2014 Latest news:

The personal-loan market is hotting up, with competition reaching a level last seen several years ago.

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M&S Money has cut its rate for people borrowing between £7,500 and £15,000. The new rate of 6pc means a best-buy £10,000 loan over a five-year term is the cheapest it has been for four years, according to Moneyfacts.co.uk

Seven lenders have now dropped their loan rates since New Year’s Day, making the landscape a little brighter for people who want to consolidate their debts.

“It will be interesting to see whether other lenders follow suit over the coming weeks,” said Moneyfacts spokesman Rachel Springall.

“Customers must shop around for the best deals, as loan rates are continuing to fall in this competitive market.”

The 6pc deal from M&S Money signifies a big fall from the leading rates of the past few years. Ms Springall said the best rate for someone borrowing £10,000 over five years was 8.4pc a year ago, 7.8pc two years ago and 6.8pc three years ago.

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