Second charge mortgages have cemented their position as the fastest-growing segment in the post-pandemic UK property finance market, according to analysis by Pepper Money.

The specialist mortgage lender noted growth in the market in the second half of 2024 alone surpassed the whole of 2023’s performance by 25%.

Pepper Money, which analysed figures from the Bank of England and the Finance & Leasing Association, also highlighted that the second charge market had expanded by 31% since the start of 2020.

Second charge mortgages, or secured loans, allow customers to access the equity locked up in their homes without impacting their existing mortgage rates, providing an alternative source of funds for home renovations, debt consolidation, and other financial needs.

Overall, homeowners accessed £1.7bn in equity via second charge mortgages in 2024 – up from £1.4bn in 2023 – and a total £6.5bn of housing wealth has been accessed by property owners in this way since the start of the pandemic, a 27% increase compared to the preceding five years.

Director of Second charge mortgages at Pepper Money, Ryan McGrath, commented that people cannot put their lives on hold until interest rates fall, which has paved the way for secured loans to “rise significantly in popularity”.

“In these challenging times, second charge mortgages have remained relatively insulated from the severest examples of financial turmoil, partly due to the flexibility they can provide homeowners needing to borrow over a longer period such as lower interest rates compared to unsecured borrowing and the ability to spread costs to make repayments more manageable,” McGrath added.

“With mortgage rates still high and inflation easing slower than hoped, anyone considering home renovations, buying another property, or consolidating debt should assess all their options – including second charge mortgages.”

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