Adverse credit study 2020/2021

Adverse Credit Study

An in depth look at adverse credit and its impact on mortgage customers

A snapshot of our research paints an interesting picture of adverse credit in the UK.

In this our third edition of the Adverse Credit Study, we conducted field work in the recent economic uncertainty back in August. We also now have the benefit of being able to share year-on-year trends following the very first study’s launch back in Autumn 2019.

1.09m

...adults in the UK who have experienced adverse credit within the past 3 years and are looking to purchase a property in the next 12 months. This number is down from 1.34m 6 months ago and 1.26m 12 months ago.

66%

...of these adults would seek advice from a mortgage broker. This is up from 57% in our last report and 40& this time last year.

69%

...of people with adverse credit, who are looking to buy a property in the next 12 months, are concerned about having a mortgage offer declined.

2.1m

...people (4%) missed a credit payment in the last 6 months and half of those (2%) people have missed several consecutive payments.

48%

...say that they did not have an agreed payment holiday in place when they missed these credit payments.

70%

...of people with adverse credit think the economic downturn as a result of COVID-19 will make it harder to get a mortgage in the future because lenders will make it tougher to do so.

35%

...of people who have adverse credit say the amount of debt they have has increased as a direct result of COVID-19, compared to 25% of people overall.

To gain an insight into how COVID-19 has affected borrowers, we decided to include several COVID-19 related questions that give intermediaries a unique view on its effects on the mortgage market. We’ve also looked to uncover just how much the pandemic has affected people in our society who have experienced adverse credit in the last 3 years.

We may have seen fewer people who have experienced adverse credit in the last 3 years than there were last year, but we expect the number of small blips on credit files to increase in the next 6 months.

As a result, it’s going to be more important than ever, for intermediaries to continue to support and find solutions for those individuals as they look to plan their financial futures.

“According to the research 66% of adults with adverse credit in the last 3 years who are looking to buy a property in the next 12 months would seek advice from a mortgage broker”

Paul Adams – Sales Director, Pepper Money

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