First-time buyers, the self-employed and older borrowers could soon find it easier to secure a mortgage under a package of reforms proposed by the Financial Conduct Authority, as the regulator looks to modernize lending rules to reflect changing working lives and demographics.
The FCA said it plans to simplify mortgage rules and ease restrictions on lenders to allow for more flexible products better suited to people with irregular incomes, later credit needs and non-traditional career paths. The changes are intended to support what the regulator calls “underserved consumers” and expand access to affordable home ownership.
Among the proposals, the FCA said it was reviewing the rules on interest-free mortgages to make them more accessible to older borrowers and would launch a targeted market study of the lifetime mortgage sector to ensure it met the needs of future customers.
The regulator also wants to encourage greater use of data and technology, including artificial intelligence, to help mortgage brokers provide faster and more accurate advice while retaining human oversight. It also plans to simplify mortgage advertising and disclosure rules to make it easier for consumers to understand information online.
David Geale, managing director of payments and digital finance at the FCA, said the reforms were designed to adapt the mortgage market to modern realities.
“We want to expand access to affordable mortgages to meet the needs of consumers today,” he said. “Different work patterns and income levels at different stages of life need to be better taken into account when assessing affordability by lenders.”
The proposals follow government pressure on regulators to support economic growth and build on steps the FCA has already taken this year to ease restrictions on the mortgage market.
In March, the regulator clarified that lenders have flexibility in applying interest rate stress tests. These are assessments that determine whether borrowers can afford repayments if interest rates rise in the future. The FCA was concerned that some lenders were applying these tests too conservatively and unnecessarily restricting access to otherwise affordable mortgages.
Following this intervention, the FCA said that lenders had expanded their borrowing options and that many borrowers could now access around £30,000 more than before.
Despite higher interest rates and rising living costs, the regulator noted that mortgage performance remained strong. It said 99 per cent of mortgages taken out since 2014, when lending standards were tightened, were not in arrears and that the number of first-time buyers had remained stable despite persistently high house prices.
As part of the review, the FCA will also consider ways to make it easier for people with inconsistent or unpredictable income, such as freelancers and the self-employed, to start looking for accommodation. It is also considering how to better support borrowers who previously struggled with debt but have since improved their credit scores.
For older homeowners, the regulator is looking at how to access more of the wealth tied up in property more safely and fairly, particularly amid growing fears that people are not saving enough for retirement.
Geale said: “As a society we don’t save enough for later life, yet people have huge wealth tied up in property. The mortgage market should be able to unlock this wealth at the right time and offer fair value as part of a wider financial plan rather than as a last resort.”
Special interest rate and long-term mortgage products, he suggested, could help retirees and older workers achieve their financial goals without being forced to sell their homes.
In a speech last month, FCA boss Nikhil Rathi said the regulator was investigating who was “excluded from home ownership, for what reason and for how long”.
He said the authority wants to enable a “mortgage market of the future” that adapts to rapid changes in technology, employment patterns and demographics while meeting consumer expectations, particularly in later life.
Rathi added: “Can some of the country’s £9 trillion property wealth be more effectively tapped and used more productively, particularly to maintain living standards in later life?”
The FCA will begin a public consultation on the proposed rule changes in early 2026, with the first reforms expected to come into force later in the year.
