Specialist residential lending review - A year defined by change

Over the course of 2025, I’ve spent a great deal of time thinking about, speaking about, and writing about the specialist residential market. Although, given how dynamic this sector is, that should not come as any great surprise. 

Looking back from the sanctuary of December, with hindsight now in view, the year has been shaped by economic swings, shifts in inflation, changes in borrower sentiment and a steady flow of political noise. Through all of this, the intermediary market has remained central, dealing with a constant stream of cases that no longer fit the neat patterns of previous years.

At this point in the year, reflection comes naturally. Understanding why the market moved as it did helps us prepare for the next cycle, at least as best we can. It also helps make sense of the clients arriving at your door today, and tomorrow. Clients whose finances look different, whose working lives are less fixed, and whose borrowing needs sit outside the boundaries that once defined the “typical” mortgage case.

With this in mind, one of the most apparent themes of 2025 has been the continued move away from the so-called traditional borrower profile. The idea of one full-time job, one payslip and a squeaky-clean credit file is becoming less common. Borrowers now often rely on more than one income source to include second jobs, freelance income, contracting work, property or investment income, or combinations of PAYE and self-employment. This shift has pushed specialist residential lending further into the mainstream, a trend that our intermediary partners have experienced first-hand throughout the year.

A major factor within this has been the rising value attached to a manual underwriting process. This has been especially important for borrowers with credit events tied to rising living costs or job moves. Many borrowers have worked hard to stay on track, but their files still reflect a turbulent period. Understanding the story behind the application has been key to providing solutions for a variety of borrowing needs, and manual underwriting has given brokers a route to place cases that may otherwise be blocked by an automated barrier.

This year began with expectations of rising activity. UK Finance pointed to gross lending reaching an estimated £260bn in 2025, with house purchase lending forecast at £148bn, a 10% rise on the prior year. Remortgaging was also expected to pick up, driven by maturing fixes and easing affordability. That prediction has broadly held up, and brokers have seen a steady rise in clients needing a more holistic review of their borrowing.

Remortgage activity has been shaped by a mix of motivations, such as locking in clearer payment terms, adjusting affordability or adapting to changes in income. Many borrowers have needed options that reflect their current financial picture rather than a strict view of historic income. This is where specialist lending has continued to grow.

Technology played an important role this year, smoothing case packaging and improving speed but it certainly hasn’t replaced the human element. The cases that defined 2025 proved that technology alone can’t assess the reality of a borrower with varied income, a recent separation, or a credit event tied to rising household costs.

Instead, tech has supported brokers in presenting cases more clearly, and it has helped lenders identify gaps earlier, but the outcome still largely depends on an experienced underwriter and a BDM team that can successfully identify and support cases from application through to completion.

Another key theme has been the changing shape of household finances. Borrowers are getting older with many needing lending into later life and younger buyers relying even more on financial support from family members to get onto or up the property ladder.

This rise in family-supported borrowing reflects a longer trend, and these products will remain important in 2026 as property prices stay high relative to incomes. At the same time, many borrowers who entered the market a decade ago are now revisiting their options where changes to work patterns, credit files and general financial wellbeing mean more clients fall just outside mainstream rules.

So, what can brokers take from 2025?

The most consistent message from 2025 is that complexity is no longer niche. Historic credit issues and changing household structures now make up a far greater share of the residential market. 

Looking forward, 2026 will bring its own pressures, and its own positives. Economic conditions will hopefully settle, earnings will stabilise, but the structure of household finances is unlikely to shift back to a simpler past. Borrowers will still want flexible assessments, clear decisions and sensible outcomes. And with more cases carrying varied income, mixed credit or changing household needs, the specialist residential market will remain best placed to give brokers a reliable and responsible route through increasingly complex borrowing requirements.