Sainsbury’s Finance research suggest that debt consolidation is now a much less significant reason for people taking out personal loans than it was two years ago.

The supermarket bank speculates that this may be an indication that many borrowers are choosing to pay off their debts rather than consolidate them.

In 2007, one pound in every 13 taken out by Sainsbury’s Finance’s personal loans customers was solely for debt consolidation purposes. In 2008 this dropped to one pound in every 19, and in 2009 this fell to one pound in every 50. In contrast, large purchases such as home improvements and cars are becoming much more common reasons for people to take out a personal loan.

The supermarket bank says that a decline in debt consolidation may be an indication that the difficult economic climate has led debt-conscious consumers to try and pay off their debts, an analysis that backs up Bank of England statistics which show that for five consecutive months in the latter half of 2009, repayments outstripped new unsecured consumer credit.

Steven Baillie, head of loans at Sainsbury’s Finance, said: “Debt consolidation has always been one of the most common reasons for people to take out personal loans