First Charge Mortgages

2025 was another year defined by complexity – for lenders, brokers and customers. Affordability pressures persisted, borrower profiles became more varied, and advice carried more emotional weight than ever. Against that backdrop, specialist lending continued to move further into the mainstream.

Our ninth Specialist Lending Study captured that shift clearly. 30% of adults, that’s over 16 million Brits, have experienced adverse credit, with more than 9 million of those incidents having happened in the past three years. And it’s not confined to a few demographics: 39% of those earning £75,000+ have experienced a credit blip. Specialist lending is no longer a niche, but a necessity.

Amid this backdrop, Pepper continued to grow in scale without compromising service. Brokers don’t just tell us our service remains strong as volumes rise, they consistently highlight it as market-leading, giving them the confidence to place complex and time-sensitive cases with us. That confidence is reinforced by continued investment in smarter digital processes and dedicated case management support, enabling us to deliver reliable turnaround times strong through market peaks and troughs. Combined with proposition enhancements like the launch of Pepper Flex, we were able to say yes to even more customers who otherwise may have found themselves declined.

But this year’s SLS also highlighted a barrier we must keep tackling – some brokers still hesitate when placing cases with specialist lenders, even when customer circumstances point clearly in that direction. Building confidence through clarity, empowerment and consistency will be a core priority in 2026.

Looking ahead, we expect a steadier landscape. UK Finance forecasts around £300bn in gross lending, signalling cautious optimism. The specialist market is also expected to expand as more borrowers fall outside high-street parameters.

While continuing to build on the strength of our residential proposition and maintain our position as the specialist lender brokers trust for service, we are also focused on expanding our Buy to Let presence. This is underpinned by recent enhancements across our BTL range, including rate reductions and broadened HMO criteria. We believe BTL will remain a growth market in 2026, driven by rental demand, refinancing cycles and the changing role of landlords in the housing ecosystem.

Finally, the rise of AI is reshaping early-stage mortgage thinking. Consumers are increasingly using technology to “pre-screen” eligibility or sense-check their options. Rather than threatening advisers, this trend highlights the growing value of human interpretation, reassurance and empathy – areas where Pepper and brokers can win together.

In short: 2025 showed how crucial specialist support has become. 2026 will be about deepening broker confidence, expanding responsible choice and continuing to deliver service that sets Pepper apart.

Paul Adams, Sales Director

Part Two: Second Charge Mortgages

If 2025 proved anything, it’s that second charge mortgages have become a central tool for customers looking to raise capital without impacting their existing mortgage rate..

Pepper continued to lead from the front in second charge lending, delivering £0.5bn of finance, well ahead of our nearest competitor. That result reflects the strength of our broker partnerships, our service ethos and the breadth of our products.

Working closely with brokers, we made even further meaningful reductions in turnaround times while maintaining lending momentum, helping everyone involved help more customers. Alongside this, brokers contributed heavily to the dozens of process and proposition enhancements introduced across the year – a powerful example of the market improving through collaboration rather than competition.

Partnership was last year’s defining theme. We deepened training programmes across brokers of all sizes and implemented over 100 continuous improvement ideas – many broker-driven. Proof that innovation is collective, not imposed.

Second charge lending also proved its value in the moments that mattered most. With customers coming to brokers carrying credit cards, personal loans, cost-of-living pressures or complex income patterns, secured loans offered a structured alternative to ‘wait and hope’. Rather than being locked into higher monthly commitments or risky short-term borrowing, households were able to take control of their finances in a way that preserved stability, protected competitive first charge rates and bought room to breathe they may not have received if choosing an unsecured solution. That practicality, supporting real people with real challenges, is why demand for seconds continues to grow.

We expect demand for second charge lending to remain strong in 2026. Falling rates may ease pressure for some, but they won’t erase it. Many households will still be looking to restructure debt, protect first-charge rates or raise capital without remortgaging for home improvements. Second charge lending is uniquely placed to support those needs in a responsible and structured way.

We expect consumer awareness to rise and more borrowers to consider a second charge earlier in their decision-making, creating opportunities for brokers to guide customers towards better-balanced outcomes.

2025 proved how essential seconds have become to the modern mortgage toolkit. In 2026, our focus is to build on that momentum, strengthening service, deepening broker

capability and helping more customers understand their options. As the awareness of second charge mortgages as a potential solution continues to grow amongst consumers, we expect brokers and lenders like Pepper to meet that demand through the broad range of options that are now available to deliver the right outcome at the right time.

Ryan McGrath, Director of Secured Loans