More Borrowers, More Risk: How Brokers Are Responding to the Rise in Adverse Credit
With millions of UK borrowers now falling outside traditional lending criteria, adverse credit is no longer a niche segment of the mortgage market. As lender appetite expands and borrower circumstances become more complex, brokers are facing both new opportunities and growing challenges.
According to Pepper Money’s 2024 study, around 8.4 million UK adults experienced adverse credit within the past three years — the highest figure recorded since the research began.
For broker Tony Higham, the transformation of the specialist lending market over the past decade has been significant.
“Back in 2013, we really only had four major lenders in the adverse credit space: Precise, Kensington, Aldermore and GE Money,” he said. “Now we’ve got Pepper, Bluestone, UTB, TML and even building societies like Mansfield becoming more active. The market has developed enormously.”
That growth has created more options for borrowers, but it has also increased expectations on brokers. Cases are now more nuanced, underwriting is more detailed, and lenders expect brokers to present applications with greater preparation and accuracy.
“Underwriters look much deeper into adverse cases,” Higham explained. “If you provide explanations upfront for missed payments, defaults or unusual transactions, you can avoid a lot of back-and-forth questions later.”
Moving Beyond the High Street Mindset
One of the biggest challenges, Higham says, is perception. Many clients approach him after being declined elsewhere or told that securing a mortgage would be impossible.
“It’s very common to hear that another broker has said nothing can be done,” he said. “But often it’s not impossible — it’s just outside their area of expertise.”
He believes some brokers mistake unfamiliarity for impossibility.
“I used to say, ‘That can’t be done.’ Now I say, ‘I can’t do it,’ which is very different. It may simply be a gap in my knowledge, not an impossible case.”
As lender criteria continue to vary widely, brokers who can think creatively and understand specialist products are increasingly valuable.
“Just because one lender declines a case doesn’t mean another lender won’t consider it,” he added.
Greater Flexibility — and Greater Risk
Lending criteria in the adverse credit market have become more flexible in recent years. Some lenders are now prepared to overlook smaller defaults or utility arrears, while loan-to-value (LTV) limits have increased significantly.
“We’re now seeing 90% LTV products in the adverse market,” Higham said. “Years ago, 75% was generally the ceiling, so that’s a major shift.”
However, he also expressed concern about increasingly stretched affordability models and higher income multiples.
“After the mini-budget, many borrowers were already relying on extended mortgage terms or part interest-only arrangements to make deals work,” he said. “Relaxing the traditional four-and-a-half-times income rule feels risky. Some lenders are now offering up to seven times income, and if there’s another economic shock, that could create real problems.”
Managing Complex and Emotional Cases
Adverse credit cases are rarely straightforward. Higham says many clients have experienced significant life events such as illness, divorce or redundancy, making the process more emotionally demanding than standard mortgage applications.
“These clients are often understandably cautious because they’ve been through difficult situations,” he said. “The mortgage process can bring back a lot of stress and uncertainty.”
As a result, brokers often spend far more time supporting clients through both the practical and emotional sides of the application.
“You’re investing more time in the case itself and in the client relationship,” he said. “Late-night phone calls and repeated reassurance are not uncommon.”
A Permanent Part of the Market
While Higham does not believe adverse credit will overtake mainstream lending, he sees it remaining a permanent and growing feature of the mortgage market.
“There will always be adverse credit cases because life happens,” he said. “The important thing is having the right systems, lender knowledge and processes in place to deal with them properly.”
For brokers working in the sector, success increasingly depends on staying informed, understanding lender criteria and managing client expectations carefully.
“These cases definitely require more work,” Higham said. “But when you help someone who thought they had no options left, those are often the cases that make the biggest difference.”
Adverse Credit Mortgages Broker Tony Higham is the lead broker and owner of Adverse.Online and Mortgage Success. The above views were expressed in an article originally published on the Mortgage Introducer Magazine.
