Pandemic impacts job status of UK employees, threatening homebuying plans

The pandemic resulted in job volatility for a quarter (24%) of UK workers, of which two fifths (39%) saw their income decrease, according to new research from the Mortgage Lender which sheds light on the far-reaching impact of Covid-19 on people’s job and financial security.

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

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 hard hit by the pandemic. A third of 18-35-year-olds experienced 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.

When it comes to changes to employment, a significant proportion of UK workers have been furloughed by their employer since March 2020. A tenth of UK workers were furloughed, with the average person furloughed for 6 months.

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 re-mortgaging.

Overall, a significant three quarters (74%) of those planning to buy a property in the next year saw their income reduce or become more volatile. Despite promises that the furlough scheme would not impact lenders’ decisions, these pandemic-related changes in income and job security could make it harder for buyers to secure a mortgage.  

Peter Beaumont, CEO of The Mortgage Lender, said: “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. 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.

“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. 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.”