Prospective FTB pipeline is strong but concerns around adverse credit and mortgage readiness are high, Pepper Money says

In the ninth edition of the Specialist Lending Study from Pepper Money, which surveyed around 4,000 adults, it found that 1.9 million millennials are expected to enter the housing market in the next three years. This is followed by 1.7 million Gen Z buyers.

However, the report found that nearly a fifth of adults said the mortgage process was a “daunting prospect” and almost a tenth were worried that their application could be declined due to their credit score.

Pepper Money said this highlighted a “persistent lack of confidence in financial literacy across the nation”.

The report noted that adverse credit, such as missed payments or defaults, is affecting 30% of adults – equal to around 16.6 million people.

This, combined with the rise in self-employment and side hustles, underscores the important role of mortgage brokers in navigating a more complex market.

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Pepper Money estimated that around 2.2 million have missed a payment or entered a debt management plan, while 300,000 became self-employed in the last three years.

Approximately 600,000 have multiple income streams and 300,000 have thin credit files.

Paul Adams (pictured), sales director at Pepper Money, said: “While a healthy 1.2 million first-time buyers will enter the market in the next year, it’s sobering that nearly a fifth of UK adults find the mortgage process daunting, rising to over a quarter among those with adverse credit who aspire to buy a home.

“It reinforces the vital role brokers play, offering expert guidance, reassurance, and a personalised approach to help create positive and sustainable outcomes for borrowers with more complex financial situations.

“As financial lives become more varied, such as growing numbers of self-employed, and a broader picture of over 16 million UK adults who have now experienced adverse credit, brokers are uniquely positioned to guide consumers through the mortgage process with confidence.”