Self-employed mortgage lending to soar 67% in next 5 years: Together
The mortgage market for self-employed individuals is projected to experience a dramatic shift, with lending expected to rise from £20.9 billion in 2023 to £34.8 billion by 2029, according to Together’s Residential Property Market Report. This 67% growth highlights the increasing demand for flexible mortgage solutions tailored to self-employed applicants.
Over the past two decades, the UK has seen a steady increase in self-employment, growing from 3.2 million to 4.3 million workers. The first quarter of 2024 alone added 183,000 self-employed individuals, reflecting significant changes in employment patterns. However, these shifts have exposed challenges in accessing traditional mortgage products, as fluctuating income levels and unconventional financial profiles make it difficult for many self-employed applicants to meet the rigid criteria of high street lenders.
Addressing the barriers for self-employed borrowers
According to Together’s research, 22% of non-standard mortgage applicants who faced rejection cited self-employment as the reason, while 10% reported sporadic income as a major obstacle. These issues underscore the need for mortgage providers to adopt more inclusive and adaptive lending practices to support the growing segment of self-employed individuals aspiring to homeownership.
Despite the hurdles, the demand for tailored mortgage solutions continues to grow. The trend aligns with broader societal changes and shifts in how people work and live. Together’s data also revealed a rise in full-time self-employment from April to June 2024, further driving inquiries for homeownership loans among non-standard applicants.
Industry shift towards inclusive lending
The evolving landscape presents an opportunity for lenders to rethink their strategies. Together’s CEO of personal finance, John Barker, remarked that mainstream lenders often favor traditional applicants with steady incomes and pristine credit histories, especially during economic uncertainty. This risk-averse approach, he noted, overlooks the potential of self-employed borrowers who might offer larger deposits or otherwise sound financial profiles.
“A more inclusive approach is needed,” Barker said. “Lenders must consider the full picture, including an applicant’s financial habits, assets, and long-term potential, rather than relying solely on credit scores or income consistency.”
Meeting the needs of a changing workforce
As the self-employed sector grows, innovative solutions and a flexible approach to underwriting are essential. The rise in sole traders, freelancers, and business owners highlights the need for specialized mortgage providers to offer products that reflect the realities of modern work and income structures.
At Mortgage Tek, we specialize in helping self-employed individuals navigate the complexities of securing a mortgage. With our expertise and commitment to understanding your unique financial circumstances, we’re here to make homeownership a reality for those who don’t fit the standard mold. Contact us today to learn how we can help you achieve your goals.