Pepper Money’s latest Specialist Lending Study (SLS) found that homebuying ambitions across the UK remained resilient, with 1.2 million adults expecting to be in a financial position to buy their first home within the next year and 4.5 million aiming to do so within three.
But while demand for homeownership remained high, the research pointed to a widening confidence gap in financial literacy that could hinder many would-be buyers.
The ninth edition of the SLS, based on a survey of 4,000 UK adults, highlighted robust appetite from younger cohorts in particular.
Millennials were forecast to lead activity, with 1.9 million expected to purchase over the next three years, alongside 1.7 million Gen Z buyers.
Yet anxiety about the process remained widespread, as nearly one in five UK adults described the mortgage process as a “daunting prospect”, and almost one in 10 feared their application may be declined due to their credit score.
The report’s publication follows the UK Government’s recent move to strengthen financial education across schools in England.
Pepper Money also pointed to the increasing complexity of borrowers’ financial profiles.
Adverse credit was at its highest level since the study began, affecting 30% of UK adults at some point in their lives.
Rising self-employment, multiple income streams and thin credit files added further layers of complexity, underscoring the importance of specialist lenders and brokers in helping people navigate the market.
Among those expecting to be able to buy in the next three years, the study estimated that 2.2 million have missed payments or entered a debt management plan, 300,000 became self-employed recently, 600,000 have several income sources and 300,000 hold thin credit files.
Paul Adams, sales director at Pepper Money, said: “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.
“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.”
