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Loan rates fall as demand for home improvements rise

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Rachel Springall, Press Officer
Rachel Springall, Press Officer / Finance Expert T: 01603 476210 E: Email Rachel
25/04/2022

Loan rates fall as demand for home improvements rise

Borrowers looking to make home improvements will find the average cost of an unsecured personal loan has fallen year-on-year, according to the latest research from Moneyfacts.co.uk.

Loan rates fall as demand for home improvements rise

Borrowers looking to make home improvements will find the average cost of an unsecured personal loan has fallen year-on-year, according to the latest research from Moneyfacts.co.uk.

  • Loan rates have fallen on small sums – on a borrowing amount of £3,000 over a three-year repayment period, the average loan rate is down from 14.6% a year ago to 14.3% today.
  • A recent survey from Direct Line revealed 50% of consumers they surveyed wanted to renovate to gain extra space.
  • Loft conversions can be a popular way to maximise living space, and insulation can cost £2,750, according to research by estate and letting agents Barrows and Forrester.
  • Borrowers can avoid paying more than £600 in interest charges on an average loan by choosing a fee-free 0% credit card instead. The longest 0% balance transfer card will cost less than £100 on a debt of £3,000. Based on the longest fee-free 0% balance transfer card, paying £140 for 22 months will clear the debt before interest applies.
  • Loan rates have fallen on small sums – on a borrowing amount of £3,000 over a three-year repayment period, the average loan rate is down from 14.6% a year ago to 14.3% today.
  • A recent survey from Direct Line revealed 50% of consumers they surveyed wanted to renovate to gain extra space.
  • Loft conversions can be a popular way to maximise living space, and insulation can cost £2,750, according to research by estate and letting agents Barrows and Forrester.
  • Borrowers can avoid paying more than £600 in interest charges on an average loan by choosing a fee-free 0% credit card instead. The longest 0% balance transfer card will cost less than £100 on a debt of £3,000. Based on the longest fee-free 0% balance transfer card, paying £140 for 22 months will clear the debt before interest applies.

£3,000 lump sum over three years

Provider, APR and fee

Total interest*

Average unsecured personal loan rate

14.3%

£661.90

Best unsecured personal loan (branch)

Metro Bank – 4.9%, no fee

£226.68

Best unsecured personal loan (online)

AA – 8.1%, no fee (non-member loan)

£375.00

Longest 0% balance transfer card

Virgin Money – 0% 34 months, 2.70% fee

£81.00

Longest no-fee 0% balance transfer card

NatWest – 0% 22 months, no fee

£0

Longest 0% purchase card

Barclaycard – 0% 24 months, no fee

£0

*The lowest loan rates do not include peer-to-peer loans. Credit card costs assume a minimum repayment of £140 each month is made. Credit cards with annual fees are excluded, introductory deals shown. Metro Bank loan requires customers to have or open a current account. Source: Moneyfacts.co.uk


 

Top unsecured personal loans - £3,000 lump sum over three years

Provider

APR %

Monthly £

Metro Bank

4.9%

£89.63

AA

8.1%

£93.75

Bank of Ireland UK

8.1%

£93.75

Novuna Personal Finance

8.1%

£93.75

Post Office Money®

8.1%

£93.75

MBNA Limited

8.3%

£94.01

Tesco Bank

8.5%

£94.27

cahoot

9.8%

£95.94

Santander

9.8%

£95.94

Admiral

9.9%

£96.07

JN Bank

9.9%

£96.07

Sainsbury's Bank

9.9%

£96.07

Top loans do not include peer-to-peer loans. Loans available to new or existing customers in the UK (not existing customers only). Source: Moneyfacts.co.uk

£3,000 lump sum over three years

Provider, APR and fee

Total interest*

Average unsecured personal loan rate

14.3%

£661.90

Best unsecured personal loan (branch)

Metro Bank – 4.9%, no fee

£226.68

Best unsecured personal loan (online)

AA – 8.1%, no fee (non-member loan)

£375.00

Longest 0% balance transfer card

Virgin Money – 0% 34 months, 2.70% fee

£81.00

Longest no-fee 0% balance transfer card

NatWest – 0% 22 months, no fee

£0

Longest 0% purchase card

Barclaycard – 0% 24 months, no fee

£0

*The lowest loan rates do not include peer-to-peer loans. Credit card costs assume a minimum repayment of £140 each month is made. Credit cards with annual fees are excluded, introductory deals shown. Metro Bank loan requires customers to have or open a current account. Source: Moneyfacts.co.uk


 

Top unsecured personal loans - £3,000 lump sum over three years

Provider

APR %

Monthly £

Metro Bank

4.9%

£89.63

AA

8.1%

£93.75

Bank of Ireland UK

8.1%

£93.75

Novuna Personal Finance

8.1%

£93.75

Post Office Money®

8.1%

£93.75

MBNA Limited

8.3%

£94.01

Tesco Bank

8.5%

£94.27

cahoot

9.8%

£95.94

Santander

9.8%

£95.94

Admiral

9.9%

£96.07

JN Bank

9.9%

£96.07

Sainsbury's Bank

9.9%

£96.07

Top loans do not include peer-to-peer loans. Loans available to new or existing customers in the UK (not existing customers only). Source: Moneyfacts.co.uk

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Homeowners looking to improve their living space may well opt for an unsecured personal loan to fund the cost, so it’s good to see loan rates have fallen year-on-year. The pandemic forced many consumers to work from home, but now, two years on since the first UK lockdown, someone’s living space may not be up to scratch to accommodate their current needs.

“A loft conversion is a popular option for homeowners and insulation can cost around £2,750, but this investment may boost a property’s value by 3%, according to research by Barrows and Forrester. Half of consumers who are planning to renovate their home are doing so to gain extra space, according to a survey by Direct Line, but it’s important consumers are conscious of the rising costs of both labour and goods for any projects, and ensure they review any insurance policy once the works are complete.

“Credit cards can be a practical alternative to a loan for funding the cost of home improvements, such as with a 0% introductory purchase deal or transferring the debt from an existing credit card to a 0% balance transfer offer, but it’s vital consumers pay back their debt before interest applies. Borrowers can avoid paying more than £600 in interest charges on an average loan at £3,000 (14.3%) by choosing a fee-free 0% balance transfer credit card instead if they can pay £140 over 22 months (NatWest). A credit card will also protect spenders under Section 75 of the Consumer Credit Act on purchases between £100 and £30,000 if a service or goods are not provided or damaged, and the card can be cancelled with ease if lost or stolen.

“Those homeowners searching for a larger property may not be able to afford to move due to rising house prices, so renovating an existing home could be a logical choice to improve their living space. Not only this, but homeowners could boost a property’s value, so if they do still wish to move, the aspiration could become a reality by boosting a property’s worth. If consumers are looking to apply for a loan, then it’s always worth reviewing a credit score before they do so, but also keep in mind that the advertised rate on a loan may not be offered to them.”

 

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Homeowners looking to improve their living space may well opt for an unsecured personal loan to fund the cost, so it’s good to see loan rates have fallen year-on-year. The pandemic forced many consumers to work from home, but now, two years on since the first UK lockdown, someone’s living space may not be up to scratch to accommodate their current needs.

“A loft conversion is a popular option for homeowners and insulation can cost around £2,750, but this investment may boost a property’s value by 3%, according to research by Barrows and Forrester. Half of consumers who are planning to renovate their home are doing so to gain extra space, according to a survey by Direct Line, but it’s important consumers are conscious of the rising costs of both labour and goods for any projects, and ensure they review any insurance policy once the works are complete.

“Credit cards can be a practical alternative to a loan for funding the cost of home improvements, such as with a 0% introductory purchase deal or transferring the debt from an existing credit card to a 0% balance transfer offer, but it’s vital consumers pay back their debt before interest applies. Borrowers can avoid paying more than £600 in interest charges on an average loan at £3,000 (14.3%) by choosing a fee-free 0% balance transfer credit card instead if they can pay £140 over 22 months (NatWest). A credit card will also protect spenders under Section 75 of the Consumer Credit Act on purchases between £100 and £30,000 if a service or goods are not provided or damaged, and the card can be cancelled with ease if lost or stolen.

“Those homeowners searching for a larger property may not be able to afford to move due to rising house prices, so renovating an existing home could be a logical choice to improve their living space. Not only this, but homeowners could boost a property’s value, so if they do still wish to move, the aspiration could become a reality by boosting a property’s worth. If consumers are looking to apply for a loan, then it’s always worth reviewing a credit score before they do so, but also keep in mind that the advertised rate on a loan may not be offered to them.”

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert