Brokers are working with a significant number of self-employed borrowers with just one year’s worth of accounts, new research from Knowledge Bank has revealed.

The criteria search specialist said the rush of self-employed applicants could be a result of lenders softening criteria for freelancers.

Several lenders, including NatWest and Halifax, are now accepting borrowers who have used the Self-Employed Income Support Scheme (SEISS).

Knowledge Bank’s findings, based on searches that brokers conducted in September, also showed that in the residential market, 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, Knowledge Bank added, with at least one term such as “defaults” or “missed payments” featuring in the most searched terms in the residential space since March.

“Lenders are understandably being cautious with borrowers with just one year of accounts,” commented Knowledge Bank operations director, Matthew Corker. “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.”

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