The average value of a consumer loan in the UK has increased by nearly £800 ($1,035) this year, research suggests.
While the average amount borrowed decreased by £109 in 2019, it has gone up by £793 (7%) in 2020, with the average loan now standing at £11,834, analysis of MoneySuperMarket data found.
In 2019, the average loan amount decreased in 72% of areas across the UK, with over half (53%) seeing a drop of £100 or more. This is in stark contrast to 2020, when nearly all areas (97%) have seen an increase of at least £100, and 80% an increase of at least £500.
In the last year, the purpose for which people have taken out a loan is likely to have changed. In 2020, the average value of a loan for home improvement increased by £1,078 and car loans increased by £638 — six times more than the £94 increase in 2019.
“Our data suggests people who haven’t been financially impacted by pandemic are looking to borrow a bit more, maybe for a new kitchen or to buy a new car,” explained Sasha Evans, money expert at MoneySuperMarket.
She added: “This year the average loans amount has also increased because we’ve seen fewer requests to borrow for things like going on holiday or to top-up a wedding fund, where people borrow less.”
Some areas of the UK saw bigger changes than others. Watford had both the biggest decrease in 2019 — down £1,145 — and the highest increase in 2020, up £1,859.
However, Chester saw highest percentage increase across the UK from 2019 to 2020, with the average loan increasing 19% or £1,794 — the second-highest increase after Watford.
At the other end of the spectrum, the Channel Islands were two of only three areas to see a decrease this year. The average loan in Guernsey was down £1,296 — 10% — on 2019. Meanwhile, in Jersey it decreased by £1,035 —7% — despite having the highest average loan amount in the UK this year at £14,695.
Across every age group loan amounts increased between 2019 and 2020, compared to the previous year, which saw a decrease across all age brackets other than 45 to 49-year-olds.
Those aged 60 to 64 saw the biggest increase in 2020 of £1,200 — up 10% from 2019. However, borrowers between the ages of 40 and 44 requested the highest amount, at about £13,610.
By comparison, those under 30 requested the lowest amounts ranging from £5,383 for 17- to 19-year-olds to £10,354 for 25- to 29-year-olds.
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