With over 8 million UK adults affected by credit issues, brokers must adapt to serve a changing mortgage landscape
With more borrowers falling outside mainstream criteria, adverse credit is no longer a niche corner of the market. As lender appetite grows and client profiles get more complex, brokers face both opportunity and pressure in adverse credit.
According to the 2024 Pepper Money study, some 8.4 million adults in the UK had experienced adverse credit in the previous three years, the highest number since reporting began.
Tony Higham remembers when the adverse credit mortgage market in the UK was limited. "Back in 2013, we had four main lenders: Precise, Kensington, Aldermore and GE Money," he said. "Now, we’ve got Pepper, Bluestone, UTB, TML and building societies like Mansfield stepping in. It’s developed significantly in the last decade."
That growth has brought more choice for borrowers and greater expectations for brokers. Lender appetite is stronger, and underwriting is more nuanced, requiring specialist knowledge and greater preparation.
"Underwriters go into a lot more depth with adverse cases," Higham said. "If you send them explanations up front for things like missed payments or large transactions, you reduce the need for repeated questions."
Beyond the high street approach
Perception remains a major barrier. Higham often works with clients previously declined by other brokers. "It’s common for someone to say they were told nothing could be done. But often it’s not that it can’t be done, it’s just unfamiliar territory."
He notes that brokers often assume something is impossible when it's simply outside their expertise. "I used to say, 'that can’t be done.' Now I say, 'I can’t do it' - which is different, because it could just be a gap in my knowledge."
In a growing market with varied lender approaches, the ability to think laterally is key. "Just because a case doesn’t work for one lender doesn’t mean it won’t work somewhere else."
Criteria shifts and lender flexibility
Lender criteria have evolved. Some are now willing to overlook low-value defaults or utility arrears. Loan-to-value ratios have also increased.
"We’re now seeing 90% LTVs in the adverse space," Higham said. "That’s a significant change from when 75% was the limit."
He also raises concerns about changes to income multiples. "Post-mini-budget, we were dealing with stretched terms and part interest-only structures. It was tough. Relaxing the four-and-a-half times income rule feels risky. Some lenders go up to seven times now. If another economic shock hits, that could create serious issues."
Working through complexity
Adverse credit cases often require more time and emotional investment. "These clients have typically experienced something serious - illness, divorce, redundancy," Higham said. "They’re cautious, and the process can bring up difficult memories."
That makes client management and clear communication essential. "You’re spending more time on both the application and the client. It’s not unusual to have late-night calls trying to walk someone through the process."
Adverse credit remains a fixture
Despite economic headwinds, Higham doesn’t expect adverse credit to dominate the market. But it isn’t going away either.
"There’s always going to be adverse cases - life events happen," he said. "The key is having the right processes and lender knowledge in place to handle them."
For brokers operating in this space, that means being thorough, staying informed, and managing expectations.
"These cases take more work, but they’re part of the job," Higham said. "And when they go through, they often make the biggest impact."
