Brits borrowing more to invest in home improvements

Britons are continuing to invest heavily in their homes despite continued reports of challenging economic conditions, according to Sainsbury's Finance, which says homeowners are spending more on home improvements and investing more in their property.

The supermarket bank, which offers a market leading personal loan with rates of 7.8% APR typical for loans of between £7,500 and £14,999 for Sainsbury's shoppers, says that in the first half of 2010, one in five personal loans (20%) was taken out solely to pay for home improvements. The figures show almost no decline from 2009 (20.7%) and interestingly, between 2007 and 2009 they reveal a 47% increase in the number of people using their loans for home improvements purposes alone. 

Home improvements accounted for 19.5 per cent of the total value of personal loans taken out in the UK in the first six months of this year, again showing no decline from the 19.4 per cent of the total value last year. The average value of a personal loan taken out for home improvements has gone up 12% from £8,237 to £9,225 from 2009 to the first half of 2010.

Sainsbury's Finance estimates that in 2009, the total value of personal loans taken out across the UK for home improvements alone was more than £3.2 billion and says it is likely to be a similar figure this year if the current trend continues.

The figures reveal that there was a sharp increase in the number of loans taken out for home improvements between 2008 and 2009, from 15.8 per cent of all loans to 20.7 per cent of all loans, which may have indicated a trend towards people improving their homes rather than moving as they assessed the true force of the credit crunch. In 2007 just 14.1 per cent of personal loans were taken out for home improvements.

Steven Baillie, Head of Loans at Sainsbury's said: "Some recent reports indicate that many Britons are delaying buying major items at the moment, but our figures indicate that when it comes to our homes, improving them is the exception, perhaps because despite increasing positivity in the housing market, many may still be choosing to improve rather than move.

"If people do decide that they need a loan to pay for their home improvements, they should make sure they look around for the best rates on the market, which could save them a considerable amount in repayments.

"For example, a saving of as much as up to £1,000 could be made on a loan of £10,000*, so there's potential for perhaps more home improvements, or it could come in handy elsewhere. Ultimately, you must make sure you're getting the best possible rate for your requirements and not paying over the odds, because you don't have to."