Mortgage rates soared at the end of September after former Chancellor Kwasi Kwarteng’s budget statement sent the markets into turmoil.
And whilst rates have come down a little since then, the average mortgage price is still higher than it was year ago leaving many borrowers facing affordability challenges.
New analysis by Mortgage Broker Tools, which processes cases through its software, revealed the self-employed had faced some tough challenges as a consequence of these price rises.
It said prior to the mini-Budget in September 2022, 28% of mortgage enquiries from self-employed applicants were unable to achieve the loan size requested as they were considered unaffordable.
But after the even, however, this number rocketed by nearly a third (32%) to 37% of self-employed mortgage enquiries that were considered to be unaffordable.
For those who are self-employed and concerned about taking out a mortgage, there is some hope. Firstly, Mortgage Broker Tools revealed, competition has returned to the market in recent weeks, with lenders cutting rates and offering more achievable stress testing.
Tanya Toumadj, CEO at Mortgage Broker Tools, said: “As we saw from the mini-Budget last autumn, fiscal policy statements can have a significant impact on financial markets, interest rates and ultimately the accessibility of mortgage finance, so we’ll all be watching closely to see what the Chancellor has to say at the Dispatch Box [in the Budget on Wednesday 15 March].
“It’s unlikely that this Budget announcement will have quite such a dramatic impact on mortgage affordability, but even small changes can have a potentially huge impact on the prospects for individual clients, particularly in the current uncertain economic environment.”
Self-employed: Improving your chances of being accepted for a mortgage
If you are self-employed and keen to improve your prospects of being accepted for a mortgage, we have published this guide to help you.
Having two to three years’ of accounts and a good credit score will enhance your application, and the bigger deposit you can gather, the better.
Seeking advice from a broker can also be really helpful as they will have access to a wider range of deals and can advise you on the best way to proceed if you face challenges.
