The role of a broker is to help customers find the right mortgage for their circumstances, whatever their circumstances. High street lenders might be the first place people turn to, but they’re not always the best fit. As the financial landscape shifts, more and more customers are finding themselves needing a different approach.
Adverse credit is a growing issue, and it’s something brokers are seeing more frequently. According to our latest Specialist Lending Study, 8.4 million people have experienced adverse credit in the last three years – the highest number we’ve ever recorded. It’s a reality that’s becoming harder to ignore, especially as the cost-of-living crisis continues to bite. The truth is, past financial blips don’t always reflect a person’s ability to afford a mortgage today, but that doesn’t stop high street lenders from turning them away.
Official figures support the trend seen in our research. The latest figures from the Insolvency Service show individual insolvencies hit 117,947 in 2024 – up 14% from the previous year. Debt Relief Orders (DROs) have also reached record levels after eligibility was expanded, and the upfront fee was scrapped. All of this paints a clear picture – more people are struggling financially, and many of them will face barriers when applying for a mortgage.
For brokers, this presents both a challenge and an opportunity. High street lenders might accept a small amount of adverse credit, but many applications are declined as soon as things get more complex – often regardless of whether the customer is financially stable today.
One of the biggest sticking points is when a history of missed credit payments is combined with another consideration, like outstanding unsecured debt. Our research found that 41% of people with adverse credit have increased their unsecured borrowing in the last year, and nearly a third (30%) now have debts over £5,000. For 10% of them, that figure is more than £15,000.
The rise of Buy Now Pay Later (BNPL) has also contributed, with 44% of users saying their debt has gone up in the last year. Unsurprisingly, 42% of customers now worry that their unsecured debt will prevent them from getting a mortgage.
One of the problems for this group of customers is that many high street lenders apply strict debt-to-income ratio (DTIR) limits. If a customer’s debt level crosses a certain threshold, their application won’t even get a second look. But this rigid, one-size-fits-all approach doesn’t take into account individual circumstances. Some customers might have taken steps to improve their finances, or their debt might be perfectly manageable in their budget. That’s where specialist lenders step in.
At Pepper Money, for example, we take a different approach. Instead of applying automatic DTIR caps, we look at whether customers can sustainably afford their mortgage repayments. That means even if a high street lender has turned them down, we might be able to offer a competitive solution. For brokers, that’s an opportunity to help more customers – especially those who think their mortgage options are limited.
As more people face financial challenges, it’s widely predicted that specialist lenders will play an even bigger role in helping brokers serve a wider variety of customers with increasingly diverse circumstances. By working with lenders who are able to take a more flexible, case-by-case approach, you can help more customers achieve their homeownership goals — even when their financial history isn’t perfect. In 2025 and beyond, specialist lending isn’t just an alternative; it’s becoming an essential part of the market.
