Adverse Credit Mortgage Sales Hit Their Highest Level Since 2008: What It Means for Borrowers

What the figures show

New analysis by the consultancy Broadstone, based on Financial Conduct Authority data obtained through a Freedom of Information request, shows that mortgage sales to borrowers with impaired (adverse) credit histories are at their highest level for around 18 years.

• In 2025, 10,089 mortgages were sold to borrowers with impaired credit, up 23% on the 8,183 sold in 2024. It is the first time the annual total has passed 10,000 since 2008.
• Activity picked up in the second half of 2025, with 5,776 sales, 24% more than the same period of 2024 and 34% more than the first half of 2025.
• The trend has carried on into 2026, with 5,965 sales in the first six months of the year.
• The second quarter of 2026 saw 3,098 sales, the highest quarterly figure since the third quarter of 2008, when 6,540 were recorded.

These figures exclude product transfers with an existing lender, further advances, second charge mortgages and business loans, so the true number of people with adverse credit borrowing against property is higher still.

What counts as impaired credit?

Under the FCA’s reporting criteria, an impaired or adverse credit history can include significant arrears on a mortgage or on unsecured borrowing, recent County Court Judgments (CCJs), an Individual Voluntary Arrangement (IVA) or bankruptcy. In practice, lenders look at a much wider range of issues, including defaults, missed payments, debt management plans and payday loans.

Why is this happening?

Several factors are coming together. The pandemic, the cost of living crisis and the sharp rise in interest rates from 2022 left many households with marks on their credit files. For a lot of these borrowers, a missed payment or default from a difficult period says little about whether they can afford a mortgage today.

At the same time, lenders have better data and modelling tools, allowing them to look at the individual rather than simply declining anyone with a history. Competition among specialist lenders has increased, bringing more products and more flexible criteria.

The regulatory backdrop has also shifted. In 2025 the FCA reminded lenders that its rules give them flexibility in how they stress test borrowers against future rate rises, introduced measures to make it easier for existing borrowers to remortgage with a new lender, and, alongside the Prudential Regulation Authority, changed how limits on high loan to income lending are applied.

Our take: this is not a return to 2008

Any headline comparing today’s market with 2008 is bound to raise eyebrows, so it is worth being clear about the differences.

Before the financial crisis, adverse credit lending was often combined with self-certified income, high loan to values and little real check on whether the borrower could afford the payments.

Since the Mortgage Market Review in 2014, every lender has had to verify income and carry out a full affordability assessment. That has not changed. A borrower with adverse credit still has to prove they can afford the mortgage, and lenders price for the extra risk through higher rates and lower maximum loan to values.

What has changed is that more lenders are willing to look at the story behind the credit file. In our experience, the questions that matter most are:

• How recent is it? A default from five years ago is treated very differently from one registered last month.
• How serious is it? A handful of late payments is a different proposition from a bankruptcy or repossession.
• Has it been settled? Satisfied CCJs and defaults are viewed much more favourably than outstanding ones.
• What caused it? A one-off event, such as illness, redundancy or a relationship breakdown, followed by a clean record, is often acceptable.
• How much deposit or equity is there? A larger deposit opens up more lenders and better rates.

We see this every day. Clients who assumed they had no chance of a mortgage, sometimes because a high street bank declined them, often find there are several options available once the right specialist lender is approached with the full picture.

The growth in this market is broadly a good thing. It means borrowers who are genuinely able to afford a mortgage are no longer shut out because of a difficult period in the past. The important thing is that lending remains affordable and sustainable, and that borrowers get proper advice rather than going to the first lender that says yes.

What to do if you have adverse credit

• Check your credit file with all three main agencies, Experian, Equifax and TransUnion. Lenders do not all use the same one, and the details can differ.
• Avoid making several applications yourself. Each full application leaves a search on your file, and a string of declines will make things harder.
• Settle outstanding CCJs and defaults where you can, and keep the paperwork showing when they were satisfied.
• Make sure you are on the electoral roll at your current address.
• Be completely open with your broker. Lenders will see everything on your file, and surprises at underwriting stage are what cause cases to fail.
• Treat it as a stepping stone. Adverse credit rates are higher, but as your record improves you may be able to remortgage to a more competitive deal when your initial rate ends.