UK Personal loan market 'shrinking'

More lenders have stopped offering unsecured personal loans, a move that financial information firm Moneyfacts has called a "worrying" trend.

Hanley Economic Building Society and Eskimo Loans, which is funded by Northern Rock, have both withdrawn their products with immediate effect.

Moneyfacts says the number of unsecured loan providers fell by 10% in November.

It blames the decline on problems related to the global credit crunch, loan defaults and higher interest rates.

Before the latest withdrawals, GE Money, Leeds Building Society and LV= had already stopped offering unsecured personal loans in the past few weeks.

Recent research by the price comparison website Uswitch suggests many customers are struggling to manage their existing debts.