The UK second charge mortgage market surpassed £2.14bn in new lending during 2025 with more than 41,700 agreements completed, according to data from the Finance & Leasing Association (FLA).

The figures represent year-on-year growth of 24%, marking another period of sustained double-digit expansion for the sector and continuing a growth trend that has been evident since 2021.

Average loan sizes have also increased for the third consecutive year, rising from £45,341 in 2023 to £51,198 in 2025, reflecting what lenders describe as more strategic use of second charge borrowing.

MAINSTREAM SOLUTION

The data suggests second charge mortgages are increasingly being used as a mainstream funding solution, particularly by homeowners seeking to raise capital without disturbing historically low first charge mortgage rates secured during the ultra-low interest period.

Against this backdrop, Pepper Money said it has retained its position as the UK’s leading second charge lender, citing continued broker support and competitive pricing as key drivers.

Market pricing has become more competitive, with sub-5.5% rates and 100% LTV products available from multiple lenders, helping to broaden the appeal of the sector in a higher-rate environment.

NO LONGER NICHE

Ryan McGrath, director of second charge mortgages at Pepper Money, said: “The FLA’s latest data confirms the second charge sector’s rapid expansion, with over £2 billion in new lending and tens of thousands of new customers using these products.

“The market has now delivered multiple consecutive years of double-digital growth, reflecting a structural shift in how homeowners access equity.

“As inflation eases and base rates stabilise, demand for second charge mortgages as a mainstream solution will continue to grow throughout 2026. These products are no longer a niche offering; they’re an essential part of how UK homeowners manage equity and financial flexibility.”