Increase in home improvement loans

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by Kay Murchie

According to Lloyds TSB, there has been an increase in the amount of homeowners looking to borrow money to improve their property.

Figures from the bank show that personal loan applications for home improvement work were 19% higher during the first half of 2008 compared with the same period last year.

Furthermore, estate agents reported seeing a rise in the number of people taking their home off the market in order improve their property.

With the slowdown in the housing market gathering pace, it’s no surprise to see that over half of homeowners considering moving have decided to sit tight and improve rather than move.

Last week, the latest Nationwide survey found that UK house prices have fallen for the ninth consecutive month. This represents the biggest annual drop since the building society commenced its survey in 1991.

According to Nationwide, house prices fell by 1.7% in July and fell by 8.1% on a year-on-year basis.

Furthermore, the Bank of England reported last week that the number of new mortgages approved for house purchases has fallen by 68.4% in the year to June - the lowest level since records began in 1993.

The Bank said mortgage approvals fell from 41,000 in May to 36,000 in June. The number of mortgages approved has now fallen for 14 consecutive months.

David Wishart, director of personal loans at Lloyds TSB, said a considerable increase in home improvement personal loan requests has been noted in recent months.

The decade-long housing boom has meant that homeowners have been able to sit back and rely on rising property prices to boost the equity in their home but this is no longer a possibility, added Mr Wishart.

Lloyds TSB found that 55% hoped the improvements would enable them to sell their property in spite of the housing market slowdown, while nearly a quarter said they were carrying out changes to either enable them to continue living in their home or to increase its value.