Searches for second charge mortgages increased by 14% year-on-year in 2023, according to data from Knowledge Bank used for a dual-branded version of the Pepper Money Specialist Lending Study.

The report provides analysis of broker activity on the criteria search platform alongside the customer insights that were recently revealed in the specialist lender’s landmark research study.

The 2023 Pepper Money Specialist Lending Study found that 15.16m people in Great Britain have a history of adverse credit – missed credit payments, defaults, CCJs, unsecured arrears, secured arrears or have entered a Debt Management Plan. Meanwhile, Knowledge Bank said, there had been a modest increase in the searches for adverse in 2023 compared to 2022.

The platform said the the top five residential search terms were missed or late payments, defaults registered in the last three years, defaults registered more than three years ago, capital raising for debt consolidation and defaults over £500.

The top search terms for second charges were capital raising for debt consolidation, Debt Management Plans, defaults over £300 or registered in the last three years, and credit repair for adverse credit.

Ryan McGrath, second charge sales director at Pepper Money, said: “According to our Specialist Lending Study, the most popular use for a second charge mortgage amongst those customers surveyed is for home improvements.

“Only one in four people (27%) would consider using a second to consolidate debts if it reduced their monthly credit bill. This is probably indicative of the general lack of customer awareness of seconds, as the top Knowledge Bank search term for the product last year was debt consolidation. Plus, the majority of our completions are for debt consolidation.

With the ongoing cost-of-living crisis continuing to put a squeeze on household finances and more people turning to credit to cover day-to-day costs, brokers have an opportunity to improve awareness of Seconds and help customers get their debts under control and reduce their outgoings through debt consolidation.

“Simplifying multiple debts into a single repayment not only makes things simpler but can also dramatically reduce the cost of repaying that debt. It may not be right for everyone, but we think brokers will see even higher demand for second charge mortgages for debt consolidation in 2024 than they did in 2023.”