Birmingham has emerged as a leading hotspot for home improvement loans in 2025, as homeowners increasingly turn to borrowing to upgrade their properties.
According data from specialist lender Pepper Money, home improvement loans accounted for 9.7% of all borrowing so far in 2025, making them the second most popular reason for taking out a loan.
Birmingham lead the way with 13.4% of home improvement loans, followed by Sheffield at 9.5% and Cardiff at 9.1%.
The growing demand for these loans has been driven by rising house prices and economic pressures, prompting homeowners to invest in their existing properties rather than relocate.
Many are choosing to modernise kitchens and bathrooms, add home offices, or improve energy efficiency.
Beyond home improvements, the UK’s borrowing landscape remained diverse.
Holiday loans were on the rise, with Birmingham and Cardiff leading in travel-related borrowing at 14.6%.
Wedding loans continued to be popular, particularly in Birmingham, where 26.9% of borrowers took out loans for weddings, and in Glasgow, where the figure stood at 23.1%.
Medical expenses were a major driver of emergency borrowing, with Glasgow experiencing the highest rate of medical-related loans at 50%, followed by Nottingham at 25%.
Ryan McGrath, sales director at Pepper Money, said: “It’s clear that borrowing is playing a bigger role in how people manage their finances in 2025.
“We’re seeing more households in cities like Birmingham, Sheffield, and Cardiff using loans not just to consolidate debt, but also to invest in their homes and even fund major life events.
“Rising costs mean people are looking for smarter ways to borrow, and secured loans are becoming a more popular option for homeowners who want to access larger sums at lower rates.
“The key is ensuring that any loan, whether for home improvements, debt consolidation, or personal milestones, is the right fit for their financial situation by seeking financial advice to ensure this is the best solution for them.”
