According to figures from Pepper Money, home improvement loans make up 9.7% of all borrowing, the second-most popular reason for taking out a loan in the UK.
Birmingham accounts for 13.4% of home improvement loans, Sheffield makes up 9.5% and Cardiff accounts for 9.1%.
The average loan amount for Birmingham is estimated at £40,393, while Sheffield is slightly less at £35,077 and Cardiff comes to £36,636.
The report found that the rising demand for home improvement loans showed a “shift in consumer borrowing habits”.
It explained that debt consolidation was still popular, and homeowners were “prioritising home investments over other expenses”.
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“As financial pressures continue, UK homeowners are turning to borrowing to improve their homes rather than move. With home improvement loans now the second-most common reason for borrowing, lenders are seeing growing demand for financing options that help homeowners increase property value and enhance living spaces,” the lender explained.
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.”
