An estimated 42,000 households could take out a second charge loan this year, according to an analysis by a lender.
Pepper Money, using market statistics from the Finance and Leasing Association (FLA) as well as housing market forecasts, found that approvals for second charge loans rose by 17% year-on-year in the first 11 months of 2024.
It explained that a continuation of that growth rate would mean over 42,000 households taking out a second charge loan this year.
The lender said this would mean that the market would have grown by 39% over the past two years, pointing to 30,466 new second charge mortgages in 2023.
Pepper Money said that it expected to see “healthy competition” in 2025 with a focus on valuations, flexible product criteria and technology to differentiate lenders.
On the valuations side, the firm said that ensuring valuations were as quick and accurate as possible would be crucial, and integrating technology like automatic valuation models (AVMs) would be key.
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The lender added that lender criteria were likely to become “more flexible and tailored” and technology would need to be leveraged to “streamline the lending process, accelerating process times and enhancing accuracy”.
Ryan McGrath, director of second charge mortgages at Pepper Money, said: “There are very few markets where a prospective 39% increase over two years still looks like a drop in the ocean compared to its overall potential.
“Homeowner loans have been the mortgage market’s best kept secret for too long. As an industry, we have a significant opportunity to help more customers realise what they’ve been missing and put their property wealth to smart use to improve their finances.
“At Pepper Money, we will continue to invest in smarter systems and innovate with flexible lending criteria to build on the momentum we saw in 2024. Our service-focused culture and quicker processing times have made us the preferred choice for borrowers and brokers alike.
“Combine these developments with a government pushing for homeowner expansion, and it’s safe to say the secured loan market is on track to charge full steam ahead.”
