According to Pepper Money’s analysis of Finance & Leasing Association (FLA) figures, there were over 41,700 new agreements completed in the period.
The report noted that average loan sizes in the second charge market grew for the third year in a row, going from £45,341 in 2023 to £51,198 in 2025.
The upward trend shows that there is “growing borrower confidence” and a “shift towards more strategic capital raising, often for debt consolidation, property improvements and other significant financial objectives”.
Market pricing has also become “increasingly competitive”, with sub-5.5% rates available and 100% loan-to-value (LTV) deals available from multiple lenders.
Pepper Money said the figures confirm that second charge mortgages are “increasingly being used as a mainstream funding solution”.
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It noted that many borrowers with low first charge mortgage rates secured during the ultra-low interest period have increasingly opted for second charge to raise additional capital, as it allows them to raise equity without disturbing the primary mortgage.
“This structural dynamic has underpinned consistent annual growth since 2021 and continues to support strong demand as homeowners seek efficient ways to manage their finances”, the firm said.
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 £2bn 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.”
