Newly released data has revealed how the relaxing of criteria among some high street lenders, including Halifax and Natwest, has led to an increase in newly self-employed people applying to borrow over recent weeks.
The relaxation came after some lenders had said they would not take applications for self-employed workers that had received funding under the government’s COVID-19 Self-Employed Income Support Scheme (SEISS), with many also refusing applications from workers who had been placed on furlough.
Since some relaxed criteria to allow applications from SEISS recipients, Knowledge Bank’s criteria tracker for September shows that an increasing number of newly self-employed people with limited financial accounts – who are perhaps more likely than more experienced freelancers to apply for mortgages etc – are applying for loans.
Knowledge Bank tracks the searches made by brokers in order to identify trends and last month reported a prominent increase in search queries for “self-employed – one year’s accounts”. This comes in spite of a fall in the overall number of self-employed workers in the UK during the COVID-19 pandemic.
Discussing the findings of the criteria tracker, as well as the issues that can arise for brokers when dealing with clients that have limited or troubled financing histories, Knowledge Bank Operations Director Matthew Corker said that: “Lenders are understandably being cautious with borrowers with just one year of accounts.”
Corker continued: “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.”
