From criteria to context: The evolution of mortgage lending – Adams

As income patterns diversify and life paths become less linear, lending is adapting too, and specialist solutions are playing an increasingly central role in delivering fair outcomes.

We’re seeing a structural shift: borrowers just outside high street criteria are no longer exceptions; they’re a growing part of mainstream demand.

What’s more, it’s becoming increasingly clearer that specialist borrowing often reflects life events rather than financial mismanagement. Economic volatility, rising living costs, and evolving employment patterns have altered how people earn, spend, and manage credit. Pepper Money’s 2025 Specialist Lending Study found that 16.6 million UK adults – around 30% of the population – have experienced adverse credit at some point, with more than nine million instances occurring in the past three years alone.

These are not fringe borrowers. They include employed professionals and business owners whose incomes are strong but don’t fit neatly into high street affordability models, as well as households with stable earnings whose credit files reflect short-term disruption rather than long-term risk. In both cases, rigid criteria and automated decisioning can miss the context behind complex incomes or an isolated credit blip, leaving creditworthy borrowers outside mainstream channels. Our data suggests that 2.2 million people with adverse credit will be able to buy their first home in the next three years, 600,000 with multiple income streams, 300,000 who became self-employed within the last three years, and 300,000 with thin credit files.

Looking at nearer-term demand, among those with adverse credit planning to buy within the next 12 months, 46% became self-employed in the last three years, 37% have multiple income streams, and 15% have thin credit files.

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For brokers, this brings opportunity and responsibility. As more borrowers sit outside standard criteria, brokers are increasingly the route through which complexity is assessed. However, awareness of the value of this advice from brokers among those with adverse credit still has room to grow. Only 47% of prospective buyers in this group say they intend to consult a broker, and just 46% are aware that some lenders are only accessible through intermediaries. That knowledge gap matters, particularly when the mortgage process itself is perceived as daunting by 17% of UK adults, rising to 28% among those with adverse credit.

This is where advice-led, specialist support becomes critical. The conversation is no longer simply about access to credit; it’s about interpreting complexity, and ensuring outcomes are fair and sustainable, all core to Consumer Duty.

The product landscape is evolving to meet this demand, with more flexible approaches to credit assessment and income. But criteria alone won’t drive the next phase of growth. Confidence, both broker confidence in placing specialist cases and customer confidence in seeking advice, will be just as important.

The specialist market isn’t supplanting the mainstream, it’s broadening what ‘mainstream’ looks like. As borrower profiles continue to diversify, the ability to look beyond automated scores and assess real-life circumstances will define how effectively our industry serves today’s housing ambitions.