UK secured lending: cautious growth ahead

According to the original advertorial overview, the UK secured‑loans market , centred on mortgages and second‑charge lending secured on property , is set for modest expansion in 2026 as collateralised credit continues to offer borrowers larger sums and longer terms than unsecured alternatives.

Market forecasts point to restrained growth: the lead piece forecasts secured lending expansion of about 2.8% in 2026, with total bank lending edging to 3.3% and house‑price gains remaining subdued , a view consistent with recent industry and macro data. Nationwide’s latest figures showed a 0.3% rise in house prices in November 2025 but annual growth cooling to 1.8%, while Halifax reported flat prices in the same month and markedly weaker year‑on‑year momentum. These patterns underpin the article’s expectation of only modest equity gains for homeowners next year.

Pressure on household finances is a central theme behind rising interest in secured borrowing. Pepper Money data cited increased awareness of secured loans among homeowners , from about one‑third in early 2024 to more than half by May 2025 , which the lender links to inflationary strains and stagnant wages pushing households to access housing equity rather than alter primary mortgages. That dynamic helps explain the reported growth in second‑charge and hybrid products.

On rates, independent forecasts broadly align with the advertorial’s outlook that mortgage costs should soften through 2026. Capital.com’s analysis expects average fixed rates to trend towards around 4% next year, and the lead piece anticipates headline average mortgage rates of 2–4% driven by anticipated Bank of England cuts and lower swap rates , although some long fixes and higher‑risk cases may still price above 6%. The Office for Budget Responsibility’s projection of average inflation of about 2.5% in 2026 implies only gradual disinflation, supporting the view that rate falls are likely to be measured rather than abrupt.

Lenders’ underwriting is adapting: the lead article describes eased affordability checks introduced in 2025 and higher loan‑to‑income (LTI) multiples , in some cases up to 6× gross income , which together could lift borrowing capacity materially for qualifying applicants. Industry practice appears to be moving towards more flexible stress testing and an increase in hybrid fixed/variable products that split rate risk between borrowers and providers. That said, lenders remain selective, favouring stronger credit profiles and significant equity cushions.

Risk indicators in the source material suggest continued stability in secured portfolios. The advertorial cites an extremely low projected mortgage write‑off rate for 2026 (0.002%) and only a modest uptick in unsecured consumer defaults to around 1.0%. Taken with the slower but positive GDP outlook , the OECD raised its UK 2026 growth forecast to 1.2% in early December 2025 , these signals point to manageable credit conditions even if growth and incomes remain patchy.

Looking beyond 2026, the combined evidence in the lead piece and external commentary suggests a cautiously positive trajectory: if inflation continues to ease and official rates fall, borrowing conditions should improve and demand for secured lending may rise further in 2027–28. Consumers stand to benefit most where affordability rules are genuinely more permissive and where house‑price stability allows owners to unlock equity without excessive risk. Policymakers and lenders will need to balance expanded access with continued prudence to avoid over‑stretching households as the economy slowly normalises.

In summary, the secured‑loans market is set for gradual growth underpinned by stable collateral values, measured rate relief and more permissive underwriting. But the pace and breadth of that improvement will depend on how quickly incomes, inflation and broader economic growth evolve , factors that recent house‑price and macro forecasts portray as improving, but only incrementally.

Source: Noah Wire Services