It’s a tumultuous time for the jobs market. One of the big impacts of the pandemic has been to encourage people to reconsider what they really want from their jobs.
That may be a better life-balance, a shorter commute, or simply the ability to work from home more frequently.
And as a result, employers have seen some workers take the opportunity to hand in their notice and move to a new role.
What’s more, there is no shortage of employers looking to bring in quality recruits. The latest data from the Office for National Statistics (ONS) shows that the number of job vacancies across the UK has risen to a new record high of almost 1.3 million.
To put that into context, that’s almost half a million more vacancies than were seen in the final quarter before the arrival of Covid-19.
No two jobs are the same
When it comes to applying for a mortgage, the client’s job is understandably an important consideration for any lender.
After all, lenders have a responsibility to the borrower to ensure that the mortgage will be affordable for them, not just now, but in the future should rates continue to increase, and the client’s employment position will obviously have a bearing on that.
However, it’s important to recognise that the jobs market today is rather different from that seen just a few years ago.
We now have significant numbers of workers on zero hours contracts, for example, where there is no set minimum number of hours for them to work each week.
According to recent data from the ONS, there are more than one million workers on zero hours contracts currently, which equates to around 3.1% of people in work.
Sadly, these people are all-too-often dismissed by lenders as borrowing candidates, on account of their work contracts. Some lenders view that lack of guaranteed hours as an impediment that cannot be overcome.
It’s not the only example; it’s common for lenders to be wary around lending to those who are paid on a piece rate basis, or who have recently moved to a new job and so are within a probationary period.
This is an area where we at Mansfield Building Society believe that potential borrowers are being badly underserved. Because of this, we have adapted our own lending criteria.
As a result, we will now allow zero hours contracts and piece rate work up to 95% LTV, subject to three years income over 80% LTV and two years income of up to 80%.
In addition, we will also consider applicants who are still within a probationary period, where there is a track record of a similar position. Income from umbrella companies will also be considered.
Delivering for diverse borrowers
Prospective home buyers are a diverse bunch these days, as brokers will be only too aware. While some will have significant sums saved up for a deposit, and a lengthy employment history, others may be in less traditional employment.
Unfortunately, this fact can serve to put some lenders off, particularly those who employ a more rigid, algorithm-based approach to their lending.
With this sort of attitude, if there is anything slightly out of the ordinary, then that’s enough for the lender to walk away from the case.
This is unfortunate, as the fact that a client happens to be on a zero hours contract, or is in the probationary period for a new job in a familiar industry, should not be sufficient to wreck their borrowing dreams.
At Mansfield Building Society we take a more hands-on, person-led approach to assessing cases.
Each and every application is manually underwritten by our experienced team, which ensures that they are able to build a rounder picture of the client and the case and as a result deliver a more informed response.
We believe passionately in helping more borrowers onto and up the housing ladder, but that can only be achieved if lenders get to know their applicants better as individuals, rather than getting spooked at the first sign of complexity.
Tom Denman-Molloy is intermediary sales manager at Mansfield Building Society
