Mortgage options for the self-employed contracted in July, according to the MBT Affordability Index.

The average maximum home loan size for self-employed applicants was £221,000 last month, a fall of more than 5% since June and the lowest level since February.

While the lowest average loan size available to the self-employed fell to £90,452 last month, plunging nearly 17% since June and the lowest level since November last year.

The index adds that fewer self-employed cases were considered to be affordable by lenders, with 67% of enquiries from this class of worker passing this test, the lowest level since February.

There are 4.4m self-employed workers in the UK, according to the latest Office for National Statistics data released in May.

Overall, in July, 72% of mortgage enquiries were deemed to be affordable, which is the lowest level since June 2020, according to the index.

The maximum average loan slipped from £243,250 in June to £243,055 in July, while the minimum average loan dropped by 3%.

Data used by the index is drawn from real cases processed by advisor research platform Mortgage Broker Tools, which collects affordability results from more than 60 lenders, and criteria research from more than 100.

Mortgage Broker Tools chief executive Tanya Toumadj says: “It’s clear that the self-employed continue to struggle to demonstrate the affordability they need with some lenders, with both average available loan sizes and the percentage of affordable cases dropping to their lowest levels in months.

“Similarly, while average available loan sizes have remained relatively stable across the whole of the market, the number of lenders that are deeming applications as affordable has also fallen to its lowest level since last summer.

“So, how do we interpret these results?

“First, it’s important to acknowledge that, more often than not, there is at least one affordability option to meet a client’s requirements, whether or not they are self-employed.

“However, we’re seeing an increasing divergence in the ways that lenders calculate different elements of affordability and it’s delivering a greater spread of results.

“So, it’s more important than ever that brokers carry out comprehensive and accurate affordability and criteria research before starting an application. This can prove the difference between a mortgage enquiry successfully progressing to completion or falling at the first hurdle.”