Most Popular Loans in the UK in 2026: What Brits Are Borrowing For

In 2026, the secured loan market is expected to grow at 2.6%. While house prices are forecast to grow at 2%, mortgage growth is expected to be 2.8%. In addition to mortgages, personal loans and business loans will also continue to be high in demand. With a soaring cost of living, borrowing is considered a strategic tool for many people to manage their finances. This blog discusses some of the loans that Brits will continue to apply for in 2026 and the reasons.

Loans are expected to be popular in the UK in 2026

Here are the loans that will remain to be in demand in 2026, too:

Mortgages

ndoubtedly, the demand for mortgages will never fall. There are people looking to get their foot onto the property ladder. They will have to apply for mortgages even though the base rate set by the Bank of England goes up. In order to tackle high interest rates, many people put in larger deposits. The more money you pay upfront, the lower the loan-to-value will be. This will reduce the risk of a lender, and therefore, they will charge affordable interest rates.

Your chances of qualifying for a mortgage are higher despite a bad credit rating if you put down at least 40% payment upfront. Likewise, there are other people who prefer to refinance their mortgages. They will also continue to seek better interest rates at the end of fixed interest-rate deals.

Personal loans

Personal loans are called unsecured loans. Unlike mortgages, they are not backed by collateral. It means you do not have to bear the risk of losing assets in case you default. Unsecured loans will remain the most widely used loans in the UK in the next year. One of the reasons is that these loans can be used for a variety of reasons.

You can use them for small emergencies, or you can use them for big planned expenses. Personal loans prove to be ideal for almost all types of expenses. In fact, you can qualify for these loans despite a poor credit score.

Here is why the demand for personal loans will continue to be high in the UK in 2026, too:

• They fund small emergency expenses

One of the greatest benefits of unsecured loans is that they can easily fund small emergencies. Even if you need only £100, your application can be approved the same day. Whether you need money to repair a car or fund a medical bill, these loans will be the best bet.

In addition, there will be a probability of people relying on loans on benefits from direct lenders in the UK. However, borrowers are presumed to be exercising caution.

• They can consolidate debts

Consolidation of debts is another reason why personal loans will be sought-after in the UK in 2026. Most people struggle to keep up with repayments, and therefore, they seek consolidation loans. Personal loans help you borrow a large amount of money, too and hence consolidation is possible with them.

• Home improvement

Home renovation is also one of the common reasons why people are expected to be reliant on personal loans down the line. Home renovation is expensive, especially if you are looking for kitchen remodelling or attic conversion. Personal loans could easily allow you to borrow up to £15,000; however, some lenders might allow you to borrow up to £25,000. Bear in mind that you must have a good credit score to qualify for this much money.

• Big-ticket items

If you are looking to purchase big-ticket items, personal loans would be the best bet. Whether you are looking to purchase a car or fund your wedding, the demand for these loans will never decline.

Personal loans could be used for a variety of reasons, but most borrowers are expected to take out mid-range loan amounts out of an abundance of caution. This is because interest rates are most competitive.

Business loans

Business loans will also continue to be in demand in the UK in 2026. This is because they are easily available. These loans will continue to be applied for by entrepreneurs and the self-employed because of flexible deals and simplicity. The reasons why business loans will be in demand are as follows:

• Cash flow management

Cash flow is always a concern among businesses. Even though entrepreneurs make fruitful strategies to ensure a smooth cash inflow and outflow. Short-term business loans are very effective in ensuring a smooth flow of cash. They are especially used by those who cannot use invoice financing.

• Equipment purchase

Business loans will also help you purchase equipment. However, the borrowing amount will be large, and hence, they will be backed by collateral. Most of the time, the equipment you are purchasing is collateral. If your business's profitability is not good, you might be asked to secure them against any other valuable assets.

• Hiring Staff

It is needless to mention that business loans are also employed for hiring staff and meeting payroll expenses. Since these loans are not secured, they involve less risk.

• To launch new ventures

With the help of business loans, entrepreneurs can also cover initial setup costs. As long as you have a solid business plan, you will be able to easily qualify for these loans. The loan amount will not be large as start-up loans are generally small, to be paid back within two to three years.

• Marketing of a business

Another reason why companies will be reliant on unsecured business loans is marketing. It is vital to reach out to a large audience if you want to expand your business. Marketing and expansion involve a lot of money. In case earmarked cash is not sufficient, unsecured business loans can help.

• Investments

There are certain investments for which you might want to borrow money. These investments include sustainable investments. For instance, if you have to take up eco-friendly upgrades such as the installation of solar panels, these loans can come in handy. Interest rates are competitive for sustainable investments.

Buy Now Pay Later

Buy Now Pay Later services will be widely used in 2026. There are several people who struggle to make payments outright. They rely on Buy Now Pay Later schemes. This is a great method to spread the cost. However, this might be as expensive as loans.

Student loans

The demand for student loans will always rise. Higher studies are becoming expensive. Despite the fact that parents stash away money for their children’s education, it is impossible to pursue higher degree programmes without relying on student loans.

The good thing is that student loans are available from the government, and they are paid down only when you start earning more than the threshold income.

The final word

In 2026, the most popular loans in the UK are going to be mortgages, personal loans, business loans and Buy Now Pay Later schemes. Of course, borrowers will have to exercise caution in order to ensure that they will not struggle to repay the debt.