Fri 29th Aug, 2008
Savings not loans the reality for home improvements
Reports of a new study done by the Halifax building society puts paid to the idea that Britain is a nation of spend-now, think-tomorrow shoppers, forever borrowing to fund their lifestyle.
The annual Halifax Home Improvement Survey is part of a series of studies undertaken by the Halifax over the last 17 years. This year’s results show that only 5% of people looking to improve their home are taking out a loan to do it.
This may come as a surprise to lenders and brokers, as Home Improvements is the top reason given for taking out a loan. So are many applicants lying?
People are not obliged to use their borrowings for the purpose stated when taking out a personal loan (unless it is for specific finance, like a house or car), so it’s possible that applicants feel that they will be more likely to get the cash if they sound responsible.
The figures show that more people in the 18-34 age group were likely to take out a loan (12%) than the national average, and regional differences come into play too. Despite being the biggest savers, people in Northern Ireland were more likely to take out a loan than those living in London, who saved the least.
As many as 43% of homeowners questioned believed that their improvements would add at least £5000 to the value of their home, and a further 12% believed that the value added would be from £10,000 to £25,000. Homeowners clearly feel that they are using their savings wisely, a picture contrary to the one painted by much of today’s media.
Tony Wilcox at the Halifax commented: “This research contradicts the buy now pay later culture which is so often thought to be prevalent in the UK. The fact that the vast majority of people have saved in advance of spending is extremely encouraging. Using savings for such improvements means savers are really seeing the benefits of putting money aside.”
However, whether these figures paint an acurate picture of Britain today or just an acurate picture of those using the Halifax is another thing. There is no doubt amongst the lenders and loan brokers of Britain that the home improvement loan is as popular as ever.