The lender presented its latest findings at the British Specialist Lending Senate 2020 last week.
Pepper found that 15 per cent of 4,094 adult respondents surveyed by YouGov in February had experienced negative finance such as missed payments, county court judgements (CCJs), defaults, unsecured arrears and secured arrears in the last three years.
And around 17 per cent of these were thinking about buying a property in the next 12 months, a total of around 1.34 million nationally it estimated.
Encouragingly, this latest wave of research found that 57 per cent of respondents with adverse credit and looking to purchase or remortgage a property would be seeking advice from a mortgage broker – up from 40 per cent last year.
It also found that those with adverse credit were increasingly looking toward professional advice to help with their situation and that the strains of having adverse credit were taking their toll on mental health and relationships.
Unaware of impact
Perhaps surprisingly 58 per cent of people to have had adverse credit issues came from the more affluent ABC1 social groupings.
But there was also a lack of understanding from those surveyed about which events would affect credit records and the availability of mortgage finance as a result.
The majority of people thought it would require multiple events to affect a credit record – 61 per cent said it would need multiple missed credit payments, 57 per cent cited multiple missed utility bills, and the same proportion believed it would take multiple missed mortgage payments.
Fewer than one in ten people believed one late credit payment would result in a mark on their credit record.
Almost 20 per cent of borrowers who had some form of adverse credit did not know what a CCJ was and therefore how it could impact their ability to get a mortgage.
Notably, many over estimated how long they would need to wait to get a mortgage, with more than 25 per cent of people thought they would have to wait more than five years to apply for a mortgage following a CCJ.
And 70 per cent were worried about being declined a mortgage because of bad credit, but only 13 per cent of respondents reported this happening.
Health and relationship damage
Concerns were also raised about finances having a detrimental effect on people’s health and wellbeing.
Almost half of those surveyed said financial worries had affected their mental health and wellbeing while 46 per cent had lost sleep and a third said their personal relationships have been impacted.
The lender said these statistics demonstrated a growing opportunity for brokers to help borrowers to buy a home or to help refinance.
Pepper Money sales director Paul Adams said: “Six months ago, we carried out research that showed the potential adverse credit mortgage market was larger than probably anybody had assumed and this latest data indicates that the number of people with adverse credit who are looking for a mortgage is on the rise
“The total population of people with adverse credit has not actually changed since the last wave of research and still stands at 15 per cent of adults.
“However, more of these people intend to purchase a property in the next 12 months, up slightly from 16 per cent to 17 per cent, which equates to an increase in the potential adverse credit mortgage market of nearly 80,000.
“This increase has been driven by more people with adverse credit intending to purchase buy-to-let property to rent out in the next year, and highlights an important growth market for brokers,” he added.