Vast majority of self-employed fear mortgage discrimination

Warren Lewis
29th November 2018
Mortgage 438

According to new findings from The Mortgage Lender, as many as 71% of self-employed people feel that they are discriminated against by mortgage lenders due to their employment status.

The report – The self-employed economy; an opportunity for brokers and lenders – found that nearly a million (20%) think they would be refused a mortgage if they applied for one simply because they are self-employed.

The shock findings are from research among people who are sole traders, contractors, or running a business with up to nine employees, and suggest widespread dissatisfaction with the way self-employed people are treated when they apply for a mortgage.

The figures show 21% of self-employed people had reconsidered their employment situation because of the uncertainty of securing a mortgage. More than 4 million or some 63% believe mortgage lenders have a responsibility to provide a better level of support to self-employed, contract workers and business owners.

Of those who have applied for a mortgage 45% found it difficult to provide the information required by the lender to assess their application. And 26% of self-employed homeowners say they would live in another property if they were treated the same as an employed person when applying for a mortgage.

There are 4.86 million self-employed individuals in the UK, accounting for 15.1% of the working population, according to the Office for National Statistics.

Peter Beaumont, The Mortgage Lender deputy chief executive, says: “It’s time the mortgage industry woke up to the fact the world is changing. The growth in self-employment since the financial crash has been one of the defining characteristics of the UK’s recovery.

For such a large segment of the homeowning population to feel they will be discriminated against when they apply for a mortgage is shocking and unfair. As a sector we’ve quite happily lent to married employed people when statistics show at least half of those couples are going to split up. “

Self-employed people are creating employment opportunities and form the backbone of our economy at a time when many large employers are finding it difficult to sustain their business models and levels of employment. It’s important lenders recognise this reality and support entrepreneurs to live in the home they can afford.

Beaumont says: "It’s something that we at The Mortgage Lender have recognised, people are moving from employed careers to self-employment or they get divorced and that is real life now – that’s why we’re the real life lender, we recognise life doesn’t move in a straight line."

The full report - The self-employed economy; an opportunity for brokers and lenders – also reveals a 53% rise in self-employment since 2000 and that 60% of the growth in self-employment since 2008/09 has been in high skilled, higher paying sectors.

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