More than 42,000 households predicted to take out a second charge loan in 2025

More than 42,000 households could take out a second charge loan this year, according to analysis of market statistics by Pepper Money.

Approvals for second charge mortgages were up 17% year-on-year during the first 11 months of 2024, according to analysis of official data from the Finance and Leasing Association.

Recent months have witnessed even stronger growth rates, with the volume of new loans up 27% annually in September and 32% in October.

A continuation of the overall 17% annual growth trajectory into 2025 would mean more than 42,000 households taking out homeowner loans this year.

This scenario would mean the market would have grown by almost two fifths (39%) in total over the course of two years, from a point where there were 30,466 new second charge mortgages approved in 2023.

Pepper Money’s analysis of residential property market forecasts for 2025 points to expectations of 1.13m housing transactions this year, based on the combined expectations of Rightmove, CBRE, Savills, Zoopla and Knight Frank.

That would mean one new second charge loan being approved for every 27 housing transactions anticipated during 2025. 

This would represent a significant uptick in the frequency of second charges: for comparison, there was one new second charge loan approved for every 34 housing transactions in 2023.

Ryan McGrath, director of second charge mortgages at Pepper Money, commented: “There are very few markets where a prospective 39% increase over two years still looks like a drop in the ocean compared to its overall potential. Homeowner loans have been the mortgage market's best kept secret for too long. As an industry, we have a significant opportunity to help more customers realise what they've been missing and put their property wealth to smart use to improve their finances."