Mortgage lending to borrowers with impaired credit histories has climbed to levels not seen since the financial crisis, with almost 6,000 products sold in the first half of 2026.
Analysis by Broadstone of Financial Conduct Authority data obtained through a Freedom of Information request found 5,965 mortgages were sold to borrowers with impaired credit histories between January and June this year.
Sales reached 3,098 in the second quarter, the highest quarterly figure since the third quarter of 2008, when 6,540 mortgages were recorded.
The latest figures follow a sharp increase during 2025. A total of 10,089 mortgages were sold to borrowers with impaired credit histories last year, up 23% from 8,183 in 2024 and the first annual total above 10,000 since 2008.
Activity accelerated during the second half of 2025, when 5,776 products were sold. That was 24% higher than the 4,657 recorded in the same period of 2024 and 34% above the 4,313 sales in the first six months of 2025.
AFFORDABILITY CHANGES
The increase comes amid regulatory changes intended to give lenders greater flexibility when assessing mortgage affordability.
In March 2025, the FCA reminded lenders that its rules provide flexibility over how borrowers are stress-tested against potential future increases in interest rates. The regulator subsequently introduced measures intended to improve access for existing borrowers looking to remortgage with a new lender.
Changes have also been made with the Prudential Regulation Authority to the application of restrictions on high loan-to-income mortgage lending.
John Barbour (pictured), senior director in Broadstone’s banking and credit advisory business, said: “The acceleration in mortgage sales over the past 12 months suggests that the market is becoming more accommodating to people whose credit histories may previously have prevented them from accessing mortgage lending.
“An impaired credit history does not necessarily mean that someone cannot sustainably afford a mortgage today. Financial difficulties caused by the pandemic, the cost-of-living crisis and the rapid increase in interest rates may have left marks on borrowers’ credit records that do not accurately represent their current circumstances.
“Lenders increasingly have access to the data, analytics and modelling that enable them to take a more nuanced view of risk.
“Taken alongside growing competition among specialist lenders, greater product availability and flexibility in affordability assessments, this more individualised approach can support broader access to sustainable mortgage lending without compromising consumer protection or lending standards.”
