Secured loans present new possibilities for brokers amid significant growth
Secured loans, also known as second charge mortgages, have emerged as the fastest-growing segment in the UK property finance landscape since the onset of the COVID-19 pandemic, new figures from Pepper Money reveal.
The specialist lender analysed data from the Bank of England and the Finance & Leasing Association (FLA), showing the second charge mortgage market has grown by 31% since early 2020 — outpacing all other segments in the sector.
In the latter half of 2024, the market recorded a 25% increase in lending compared to the same period in 2023. In contrast, the next fastest-growing area — first-time buyer mortgages — rose by 21% annually.
Second charge mortgages allow homeowners to release equity from their property without altering their main mortgage. These loans are commonly used for home improvements, consolidating debt, or covering unexpected expenses. They often come with lower interest rates, longer repayment terms, and flexibility to make unlimited overpayments.
According to Pepper Money, a total of £1.7 billion in home equity was accessed via second charge loans in 2024, up from £1.4 billion the previous year. Since the beginning of the pandemic, homeowners have released £6.5 billion in total - 27% more than during the previous five-year period.
The lender reported a record year, issuing over £500 million in second charge loans during 2024. Its internal data highlights that most customers used these funds for debt consolidation, home improvements, and, more recently, to meet tax obligations such as private school VAT charges.
Pepper Money said the segment showed resilience compared to other parts of the market. Second charge lending surpassed the buy-to-let market by nearly tenfold in activity and posted 33% higher growth than overall homebuyer lending. It also outperformed the remortgaging sector, which saw an 8% decline last year, affected by rising interest rates.
“It remains a challenging lending environment with the cost-of-living crisis continuing to act as a barrier to improving people’s financial positions and higher interest rates causing buyers to deeply consider their options out of fear of disturbing their existing, favourable, fixed-term deals,” said Ryan McGrath (pictured), director of second charge mortgages at Pepper Money.
“But the reality is people can’t put their lives on hold until interest rates fall which has paved the way for secured loans to rise significantly in popularity, enabling homeowners to tap into the equity they’ve built up in their homes and use this to meet their current financial needs without disturbing their main mortgage.”
McGrath added that market momentum was continuing into 2025, citing FLA data that shows a 29% rise in second charge lending in January compared to the same month last year, with up to 40,000 households expected to take out homeowner loans this year.
“In these challenging times, second charge mortgages have remained relatively insulated from the severest examples of financial turmoil, partly due to the flexibility they can provide homeowners needing to borrow over a longer period such as lower interest rates compared to unsecured borrowing and the ability to spread costs to make repayments more manageable,” he said.
“With mortgage rates still high and inflation easing slower than hoped, anyone considering home renovations, buying another property, or consolidating debt should assess all their options — including second charge mortgages.”
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