The lender said it had a record month with a new peak in demand for second charge loans, funding £57m in March.
Ryan McGrath (pictured), Pepper Money’s director of sales for second charge mortgages, said cost-of-living pressures “show little sign of easing”, adding that the current geopolitical uncertainty would create further issues for hard-pressed households.
He continued: “Second charge mortgages are becoming increasingly mainstream as a flexible and reliable way for homeowners to access equity without disturbing their existing mortgage. With economic volatility persisting, these products offer a practical route to secure funding with greater certainty.
“We continue to see strong demand from both brokers and customers and remain committed to supporting homeowners as the market evolves.”
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Industry increase
The news comes after data released this week by the Finance & Leasing Association (FLA), which showed that the UK’s second charge mortgage market lent £228m in March 2026, the highest monthly amount since February 2008, representing a 36% increase year-on-year. Q1 2026 as a whole saw £625m of new second charge business, up 33% on the same period last year.
Fiona Hoyle, director of consumer finance and mortgages and inclusion at the FLA, said the strength reflected “demand for flexible borrowing options to support household budgeting”.
She added: “These figures highlight the continued strength of the second charge mortgage market. At a time when many customers are considering their borrowing options carefully, second charge mortgages provide a flexible route to additional finance while allowing borrowers to retain their existing mortgage arrangements.”
Pepper Money said customers were opting for second charge mortgages as a way to retain existing low fixed rate deals in the face of stubborn inflation. Anticipated cuts to the base rate have failed to materialise, and continued geopolitical volatility has caused some borrowers to think carefully about their options if they are locked in to the same historical low fixed rates they have had since the pandemic.
“For many, those deals are still in place or were replaced at rates still far more attractive than today’s. Rather than give up a favourable first charge deal to release equity, more borrowers are turning to second charge mortgages to do so without the disruption,” McGrath added.
