The UK mortgage market faces a critical challenge: keeping pace with the changing needs of borrowers today.
For many, the days of a single, salaried job lasting an entire career are gone. Instead, there’s a shift towards more flexible, diversified income sources, with self-employment, freelancing and side-hustles becoming the norm for a large portion of the workforce.Â
Yet, despite this change, securing a mortgage remains tough for those outside the traditional ‘nine to five’ job box.
We recently conducted some research which brings the scale of this challenge to life. It finds that one in four working people across the UK – rising to two in five of those with more than one job – have abandoned or put on hold plans to pursue their dream careers because of fears that doing so will affect their ability to secure a mortgage.
Furthermore, one in three say they would love to start their own business but are concerned about the impact it would have on their future mortgage prospects.
Non-traditional workers
This isn’t just fears borrowers have about what might happen. One in five working people told us they have already faced challenges securing a mortgage because of their career choice, increasing to almost one in three among those with multiple jobs.Â
Almost two in five of those with multiple jobs reported having to jump through extra hoops to demonstrate they could afford a mortgage.
The good news I take from this is that homeownership remains a major ambition for millions of people. But for too many, they believe they must make career sacrifices to make it happen.
This raises an important question for the mortgage industry: how can we help those who want to follow their career dreams without hurting their chances of getting on the housing ladder?
A changing market
These findings reflect what we increasingly hear in conversations with brokers: that a significant number of financially capable people are missing out on the opportunity to become homeowners.
Why? Because traditional lending practices are not delivering for a large proportion of ordinary people across the UK today. We know that what was once considered the ‘normal’ route to homeownership via a nine to five job simply isn’t how lots of people are living and working anymore.
As the lives and careers of aspiring homeowners evolve, so must the market that serves them. After all, the modern borrower is just as likely to be a freelancer or a small business owner as they are to be in a full-time salaried role working for someone else. Recognising this and adapting affordability assessments accordingly is essential.
That is why we are evolving to become a specialist lender, one which addresses the diverse financial needs of today’s borrowers and aims to develop solutions which support those who – because of their income streams or credit history – have found it harder to secure a mortgage than they should have.
Our recent rebrand emphasises our commitment to supporting diverse career paths, so everyone – regardless of their employment status – can ultimately find a mortgage that works for them.
Homeownership has always been important for financial security and independence, and we want that to remain the case. But this will require lenders to adapt and offer solutions that better reflect how people earn a living today.
By embracing these changes, the mortgage industry can help ensure that every responsible, capable borrower – no matter their income source – has the opportunity to achieve their homeownership goals.
Praven Subbramoney is chief lending officer at Nottingham Building Society
