"While a healthy 1.2 million first-time buyers will enter the market in the next year, it's sobering that nearly a fifth of UK adults find the mortgage process daunting, rising to over a quarter among those with adverse credit who aspire to buy a home"
- Paul Adams - Pepper Money
Pepper Money’s latest Specialist Lending Study indicates that homebuying appetite is holding firm across the UK, although confidence in financial literacy continues to trail behind.
The study finds that 1.2 million UK adults expect to be in a financial position to purchase their first home within the next 12 months, rising to 4.5 million over the next three years. Millennials are projected to make up the largest group, with 1.9 million anticipating a purchase over the next three years, joined by a further 1.7 million Gen Z buyers.
Pepper Money’s 9th edition of the report, based on a survey of 4,000 UK adults, highlights both strong demand for homeownership and ongoing uncertainty around financial understanding. Nearly one in five adults, or 17%, describe the mortgage process as a “daunting prospect”, while close to one in ten are concerned their credit score could result in a declined application. The findings suggest a sustained confidence gap in financial literacy across the country.
The report follows the UK Government’s recent decision to strengthen financial education within England’s school curriculum. Pepper Money notes that the change could help address long-term issues around financial confidence identified in the study.
The 2025/26 edition also outlines the increasing complexity of borrowers’ financial circumstances. The prevalence of adverse credit, including missed payments or defaults, has reached its highest level since the study began. According to the report, 30% of UK adults, or an estimated 16.6 million people, have experienced adverse credit at some point.
This trend, combined with growth in self-employment and multiple income streams, highlights the role of mortgage brokers in supporting borrowers who may need specialist lending routes to pursue homeownership.
Of those expecting to be in a financial position to buy within the next three years, Pepper Money estimates 2.2 million have missed a payment or entered a debt management plan, 300,000 became self-employed in the last three years, 600,000 have several income sources, and 300,000 have thin credit files. These trends underline the range of financial backgrounds seen among potential buyers.
“While a healthy 1.2 million first-time buyers will enter the market in the next year, it's sobering that nearly a fifth of UK adults find the mortgage process daunting, rising to over a quarter among those with adverse credit who aspire to buy a home,” said Paul Adams, sales director at Pepper Money. “It reinforces the vital role brokers play, offering expert guidance, reassurance, and a personalised approach to help create positive and sustainable outcomes for borrowers with more complex financial situations."
"As financial lives become more varied, such as growing numbers of self-employed, and a broader picture of over 16 million UK adults who have now experienced adverse credit, brokers are uniquely positioned to guide consumers through the mortgage process with confidence.”
