UK consumers borrow £3.2 billion in loans

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.

Dramatic Increase

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.