A growing number of newly self-employed borrowers are seeking lenders that will consider them on the basis of just one year’s accounts, the latest criteria searches from Knowledge Bank reveal.

“Self-employed one-year’s accounts” was the second most searched-for phrase by brokers using the platform on behalf of their residential clients in September.

It follows a number of lenders including NatWest and Halifax loosening criteria for freelance borrowers and starting to accept those who have used the Self-employed Income Support Scheme (SEISS).

Despite the number of self-employed people in the UK falling by roughly 700,000 in the year following the first lockdown, according to Statista, there has been a slight increase in the past few months.

However, the most searched-for residential term over the last month was one that frequently appears at the top of the list: “maximum age at end of term”. 

Advisers were looking to maximise borrowing for many of their clients as“income multiple used for affordability assessment” was the third most searched phrase in the residential market.

Knowledge Bank’s figures also suggest that advisers are dealing with a large number of clients with a less-than-perfect credit history as “defaults” featured twice in the top five list of most-searched terms.

“Defaults registered in the past three years” was fourth and “defaults registered over three years ago” was fifth.

The trend has been evident for the past six months with at least one term indicating financial difficulties appearing in the most-searched terms for residential mortgages since March.

In the buy-to-let market, September’s top five search terms suggest that despite talk of a landlord exodus, there is still plenty of interest from borrowers who have never owned an investment property before.

They were: “first-time landlord”, “lending to limited companies”, “minimum income interest-only”, “requirement to be a homeowner” and “first-time buyers”.

In the second-charge sector, several of the top terms suggest borrowers are looking for ways to ease financial pressure.

They were: “maximum LTV”, “mortgage or secured loan arrears or defaults”, “capital raising for debt consolidation”, “married couple application in single name” and “maximum age at end of term”.

Meanwhile, for advisers in the equity release market, September’s top search terms were: “flat roofs”, “early repayment charges”, “non-standard construction”,  “married couple application in single name” and “sheltered accommodation”.

Knowledge Bank operations director Matthew Corker says: “Lenders are understandably being cautious with borrowers with just one year of accounts.

“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.  

“Outside of the self-employed market, with the stamp duty holiday ending at the end of September, a clearer picture of the mortgage market is coming into focus.

“One area that sadly looks set to stay is financial difficulties. 

“The pandemic certainly impacted people’s finances, and searches connected to defaults and debt consolidation look set to continue.

“Another constant from the pandemic that is certain to continue is the vast number of criteria changes – there have been a remarkable 37,214 changes so far this year.”