Employment patterns have changed significantly over recent years, but parts of the mortgage market are still trying to assess affordability through a far more traditional lens. This means that an increasing numbers of borrowers are finding themselves treated as complex cases simply because their income no longer fits neatly into one category, despite often demonstrating strong earning potential and consistent financial management over a sustained period.
This shift is happening right across the workforce. More people are combining employed roles with freelance work, relying on secondary income, working on contracts, or generating earnings from several sources at once. In many cases, these are not temporary arrangements or signs of instability but represent long-term working patterns which reflect how modern households now manage their finances and build resilience into their income.
Recent research from the Work Foundation at Lancaster University highlights the scale of this change. Its analysis found there are now a record 1.23 million people on zero-hour contracts in the UK, an increase of 181,000 since July 2024. Much of this growth has been driven by workers aged between 16 and 24 but this is no longer simply a student or casual workforce. The research found that 77% of people on zero-hour contracts are not in full-time education, while almost a third depend on these arrangements for full-time work.
These working arrangements are also heavily concentrated in sectors such as healthcare, education, retail, hospitality and transport. Many borrowers earning income through these structures are therefore doing so consistently, often over a number of years, despite not fitting what lenders may historically have viewed as straightforward employment.
This is where lending approaches need to continue evolving alongside wider labour market trends. Too often, income which falls outside a fixed salary structure is viewed cautiously from the outset. Secondary income may only be partially considered, bonus income can be heavily restricted, and applicants in probationary periods or on variable contracts can sometimes find themselves ruled out early in the process despite demonstrating good levels of affordability and strong payment histories.
For examples, someone working regular contracted shifts alongside generating a more flexible secondary income may have more dependable earnings than a borrower relying entirely on a single income source. Equally, many self-employed applicants now operate successful businesses despite income fluctuating slightly from year to year, particularly following the economic disruption businesses have had to navigate in recent times.
As a result, there’s growing recognition across specialist lending that context matters just as much as structure when assessing affordability. Looking at the latest trading year where appropriate, assessing regular bonus income realistically, or considering multiple income streams together can often provide a far more accurate reflection of a borrower’s position than relying solely on rigid income models.
None of this removes the need for responsible lending standards. Affordability remains central to every lending decision and income still needs to demonstrate sustainability. However, there is an important distinction between income which is genuinely unstable and income which is simply structured differently from historic norms.
This is also where the advice process continues to demonstrate its value. Understanding how income is earned, how long it has been sustained and which lenders are best placed to assess it properly has become an increasingly important part of securing good customer outcomes.
There is also a broader market issue sitting behind this conversation. Proposed reforms under the Employment Rights Act are expected to introduce additional protections for zero-hour contract workers from 2027, including rights around guaranteed hours and compensation for cancelled shifts. Regardless of where opinion sits on these changes, they reinforce the fact that flexible employment is now a permanent feature of the UK labour market rather than a temporary trend.
The same research also highlighted that women, younger workers, disabled people and ethnic minority groups are disproportionately represented in sectors where these contracts are most common. Lending models which rely too heavily on outdated definitions of acceptable income therefore risk unintentionally narrowing access to finance for large parts of today’s workforce.
The mortgage market has always adapted alongside wider economic and social change, and income assessment should be no different. Borrowers are not becoming less financially responsible, but employment patterns are becoming far more varied, making it increasingly important for lenders to assess affordability based on the realities of modern working life rather than outdated expectations of how income should look.
