Almost nine in ten mortgage brokers believe lenders are failing to adapt to changing employment and income patterns, potentially shutting creditworthy borrowers out of the housing market.
New research from Nottingham Building Society found that 88% of brokers believe lenders have been too slow to respond to borrowers with non-traditional financial circumstances.
Meanwhile, more than a quarter of consumers (27%) have delayed, abandoned or decided against applying for a mortgage because of how they earn their income.
The findings raise concerns about whether lending criteria reflect the growing number of self-employed workers, contractors and people with multiple income sources.
The building society’s Doorstep Divide report surveyed more than 500 mortgage brokers and 2,000 UK adults.
Brokers warn lending criteria are falling behind
Nearly seven in ten brokers (68%) expect borrowers with non-standard financial circumstances to become the norm.
Furthermore, 31% say this has already happened, while 49% expect it within the next 12 months.
Nine in ten brokers (90%) also believe lenders should prioritise products that accommodate a wider range of financial circumstances.
However, brokers report persistent difficulties placing applications involving complex incomes.
Almost one in five (19%) identify initial affordability assessments as the biggest obstacle. The same proportion point to evidence and documentation requirements.
Meanwhile, 18% cite inconsistent documentation requirements between lenders as their main difficulty.
The findings suggest that some borrowers face obstacles even when brokers consider their applications viable.
Self-employed borrowers face particular difficulties
The consumer research highlights the impact of existing lending criteria on prospective buyers.
More than half of respondents (58%) believe lenders judge people with non-traditional incomes more harshly than salaried employees.
Similarly, 66% believe variable or irregular earnings make securing a mortgage more difficult.
For some borrowers, these concerns prevent them from applying altogether.
More than a quarter (27%) report delaying, pausing, abandoning or deciding against a mortgage application because of their income arrangements.
Among self-employed respondents, that figure rises to 49%.
Only 27% of adults believe the mortgage application process offers a level playing field.
Furthermore, just 25% think lenders treat applicants with non-traditional incomes fairly.
Calls for lenders to rethink affordability assessments
Nottingham Building Society is calling for greater consistency in how lenders assess self-employed applicants, contractors and borrowers with multiple income sources.
It also wants lenders to give greater consideration to rental payment records and resolved credit problems.
More than three-quarters of consumers (77%) believe regular rent payments should help demonstrate an applicant’s ability to afford a mortgage.
Meanwhile, 89% of brokers believe lenders should place greater weight on current financial stability than historic credit problems that borrowers have resolved.
Aaron Shinwell, chief lending officer at Nottingham Building Society, said: “Brokers and consumers are describing the same gap from different sides of the mortgage process. People want a fair chance to explain how they earn, what has changed and where they are now.
“Brokers need clarity about what evidence is required and confidence that a nuanced case will reach someone able to consider the full picture.”
He added: “We are asking lenders, brokers, and the wider industry to be clearer and more consistent about how complex income is assessed, give proper weight to rental history and work collectively to improve fair access for borrowers whose circumstances do not fit a standard model.”
Borrowers may be ruling themselves out unnecessarily
The research also suggests that some prospective buyers are excluding themselves from homeownership without exploring their mortgage options.
Sarah Harrison, chief executive at the Building Societies Association, pointed to separate research showing that 47% of aspiring homeowners had never approached a lender or mortgage broker.
She said: “Building societies have shown that responsible lending and greater flexibility can go hand in hand, helping people with a wide range of non-standard circumstances take their first step onto the property ladder.”
Nottingham Building Society has proposed six changes to improve mortgage access.
These include standardising income evidence, recognising overseas credit histories and limiting the impact of resolved adverse credit records.
The lender also wants greater clarity before applications begin, alongside better monitoring of fair access under the Financial Conduct Authority’s Consumer Duty.
For estate agents, the findings highlight the importance of establishing buyers’ financing options early in the sales process.
However, the report also suggests that buyers with unconventional incomes should not automatically assume they cannot obtain a mortgage.
