Analysis from Pepper Money showed the value of second charge lending in Q1 this year had risen by 40% since the comparable period in 2023.
Based on data from the Finance & Leasing Association (FLA), this has increased by around £137m since the first three months of 2023.
There has also been a 26% uplift in the volume of secured loans, rising from 7,446 loans in Q1 2023 to 9,406 loans in Q1 2025.
Pepper Money said if this trend continued, the number of borrowers selecting a second charge mortgage could rise to more than 42,000 by the end of this year, up from 35,705 in 2024 and 30,466 in 2023.
The lender suggested the second charge market was the fastest growing in the mortgage sector, expanding by 27% between 2020 and 2024 – outpacing the mainstream mortgage market’s growth of 31% over the same period.
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More consumers know about second charge lending
This is amid an increased awareness of the second charge market.
Pepper Money found that 51% of adults in the UK knew about secured loans as a means of raising capital. This rose to 54% among homeowners who were seeking ways to secure more finance without affecting their existing primary mortgage rate.
Previous research from the lender carried out in April 2024 found that just 33% of adults knew about second charge mortgages.
The lender said it had been raising awareness of second charges through targeted campaigns to inform consumers of how the finance can support their goals.
Ryan McGrath, director of second charge mortgages at Pepper Money, said: “The secured lending market continues to gather momentum, with more than half of homeowners now aware of this previously little-known product.
“This increased understanding, coupled with economic pressures, has been reflected in the amount of secured lending that is taking place, reaching £470m in the first quarter of the year, which puts the market well on its way to reach £1.7bn by the end of 2025, with Pepper Money’s 2024 lending volume standing at over £500m.”
He added: “More consumers are recognising the opportunity that secured loans can provide. Unlike personal loans or credit cards, these loans allow individuals to unlock the value in their property, offering larger loan amounts, longer repayment terms, and typically lower interest rates – as well as enabling them to borrow without impacting the rate on their primary mortgage, which isn’t possible with a remortgage.
“While not right for every homeowner, for the right person a secured loan can provide a sensible way to make home improvements, settle personal tax bills, pay off school fees, or consolidate debts.”
