According to new figures released by Mojo Mortgages, UK homeowners are now borrowing more money from mortgage lenders than ever before to fund home improvements.
‘Perfect storm’ for current trends
Findings from mortgage broker Mojo Mortgages show the average amount of money being applied for by existing homeowners to fund renovation projects has risen by over £13,000 (up 25%) throughout the pandemic -up from an average of £52,209 in 2019 to £65,267 as of August 2021.
As well as the amount of money being borrowed per applicant rising so has the number of people looking to borrow increasing - with remortgage applications for home improvements up 174% for the year so far in comparison to this time in 2019.
Experts believe there are several factors behind the surge in total applications and the number of funds being applied for with record-low mortgage rates alongside the rising costs of building materials and labour, as well as more ambitious projects creating the perfect storm for remortgage applications. Cassie Stephenson, director of mortgages at Mojo Mortgages echoes these sentiments.
Stephenson says: “After such an uncertain 18 months you might have thought that purse strings would have tightened from both homeowners and lenders, however in many cases, this has been the complete opposite. With people spending more time in their homes than ever before, homeowners have had the time to imagine their dream property and the steps required to make this a reality as society opens up and returns to normality.”
“Couple this with record-low rates for remortgages - as low as 0.83% in some cases - and you can see why homeowners are looking to strike while costs are low.”
Effects on tradespeople
The rising interest in home renovations has also impacted tradespeople. Adrienne Minster, chief executive officer of Rated People, has noted how this has been a boost for tradespeople but labour being more costly for consumers.
She comments: “This boom has been fantastic for ambitious tradespeople wanting to take on more work and grow their businesses, but it’s also been one of the factors contributing to a materials shortage. Materials such as cement and timber are costing tradespeople more to buy and, as a result, quotes can be higher than normal for work.”
“Trade businesses are working hard to secure supplies, but consumers can continue to benefit from planning improvements ahead of time and being flexible with dates where possible.”
Cass Heaphy, digital director of Paving Direct also notes the impact of Covid-19 on consumers and manufacturers.
Heaphy explains: "With the effects of COVID-19 still working through the global supply chain, manufacturers and suppliers are either raising their prices or taking significant hits on their margins. This is now being felt by consumers as the cost of cement, timber and other building materials soar."
Heaphy concludes: "The underlying cause is the rapid scaling up many businesses are undertaking from their lockdown states. There is a huge demand for goods and supplies everywhere with less sealift capacity than there was prior to Covid. This is coupled with additional Covid disruption in national ports, haulage networks and manufacturing. These factors create conditions where shipping and transport prices have skyrocketed, and this is being passed on in the cost of goods and the on to the consumer."