Knowledge Bank’s criteria tracker for September has indicated that mortgage advisers are working with a “significant” number of self-employed borrowers with just one year’s worth of accounts.
The platform says this may be as a result of lenders softening criteria for freelancers recently, with a number of lenders, including NatWest and Halifax, now accepting borrowers who have used the Self-Employed Income Support Scheme (SEISS).
In September, brokers were working with a number of clients who have chequered financial histories. ‘Defaults’ featured twice in the five most-searched terms in September including ‘Defaults registered in the past three years’and ‘Defaults registered over three years ago’.
Financial difficulties have been a trend for the past six months, with at least one term such as ‘missed payments’ or ‘defaults’ featuring in the most-searched terms in the residential arena since March.
In September borrowers were also looking to use second charge mortgages to help ease financial pressure. ‘Capital raising for debt consolidation’ was amongst the most-searched terms by brokers looking for second charge products.
In the bridging market, ‘second charge loans’ appeared in the most-searched terms for the first-time since February 2021. Those wanting second charge bridging loans are looking for finance for a range of activities, some of which include: business expansion, property investment, and renovating existing properties, potential looking to make them more energy efficient.
Matthew Corker, operations director at Knowledge Bank, said: “Lenders are understandably being cautious with borrowers with just one year of accounts. Most industries have been impacted to some degree by the various lockdowns, so untangling whether income is sustainable and a reliable indicator of future performance has been difficult.
“Lenders are relaxing restrictions slowly, however, there is still some way to go for self-employed applicants before they are afforded the same variety of choices they had prior to the pandemic.
“Outside of the self-employed market, with the stamp duty holiday ending at the end of September, a clearer picture of the mortgage market is coming into focus.
“One area that sadly looks set to stay is financial difficulties. The pandemic certainly impacted people’s finances, and searches connected to defaults and debt consolidation look set to continue.
“Another constant from the pandemic that is certain to continue is the vast number of criteria changes – there have been a remarkable 37,214 changes so far this year. With the continual stream of criteria changes, brokers do not have time to spend hours every day on the phone to lenders and updating spreadsheets with the latest criteria.
“Using a comprehensive criteria search system can save brokers a massive amount of time, and also ensure they are providing best advice.”