Pandemic impact on job security threatens home buying plans across UK

The pandemic has resulted in job volatility for around a quarter (24%) of UK workers, of which two in five (39%) saw their income decrease, according to new research published by the Mortgage Lender.

Of those who experienced a job change, most were furloughed, followed by losing their job altogether.

The Mortgage Lender’s research found that self-employed workers are the most likely to have experienced job volatility, with over a quarter (27%) seeing their employment status change during the pandemic.

Younger workers were also hit hard by the pandemic, with a third of those between the ages of 18 and 35 experiencing some change to their employment status, almost three times that of over-55s, at 12%. Lower earners and those working on zero-hour contracts were also far more likely to have become unemployed during the pandemic.

“It’s incredibly eye-opening to see that such a large proportion of UK adults experienced a change to their job status since the pandemic, with a big proportion of those losing income,” commented CEO of The Mortgage Lender, Peter Beaumont.

“More than 18 months on and we are beginning to see the long-term financial impact of this. While people who were furloughed, or who made use of payment holidays, were promised that it would not impact their credit history, we are seeing anecdotal evidence that this may not be the case.”

With a high proportion of UK adults experiencing changes to their job status and income, The Mortgage Lender’s findings suggest that more people than previously thought could face difficulties buying a home or remortgaging.

Overall, around three-quarters (74%) of those planning to buy a property in the next year saw their income reduce or become more volatile.

“In a frenetic property market, where demand is high and supply is low, prospective buyers are under pressure to react quickly and be agile when securing a mortgage,” Beaumont added. “In reality, lending decisions don’t typically fit real life borrowers. This is especially true following the pandemic, where we’re seeing an influx of people with potentially adverse or imperfect credit histories.

“It’s therefore extremely important that the lending market reacts to the trends in UK employment, particularly by considering more complex financial situations. Alternative and specialist lenders will be extremely valuable in this environment, where traditional lenders may have less capacity to adapt to meet real life circumstances.”

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