UK consumers borrow £3.2 billion in loans for home improvementsIs rise due to problems moving up housing ladder?
06 July 2011
Based on an analysis of its loans book and market share, new research from Sainsbury's Finance estimates that one in five personal loans in the UK - collectively £3.2 billion - are taken out solely for investing in the home.
Sainsbury's estimate of 21% for 2011 shows a marked increase since 2007, when the proportion was 14.1%. Steven Baillie, head of loans at Sainsbury's Finance, has speculated that this may, in part, be reflective of the growing numbers of people struggling to move up the property ladder.
However, the trend appears to be leveling off, with the proportion of home improvement loans taken out rising only slightly in the past year and the average value of home improvement loans falling by £509 to £8,318.
Other reasons people cite for taking out a personal loan are car purchase, holidays and debt consolidation.
What you could save.
Which? personal loans expert Dean Sobers commented: 'The difference in interest you could be paying between the highest and lowest rates on a £10,000 loan over five years is currently £1,165. Whatever your reason for taking out a loan, taking the time to shop around can save you a lot of money in the long run.
'Our Best Rate loans tables show the most competitive lenders in the market, with Sainsbury's currently topping both our tables for a £5,000 loan over three years and a £10,000 loan over 5 years.'
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.