FCA rethinks mortgage access

FCA Signals Major Mortgage Reform

The Financial Conduct Authority has unveiled plans to consult on wide-ranging reforms to the UK mortgage market, with the aim of widening access, simplifying rules and ensuring the system reflects how people earn, live and borrow today. The review is designed to support first-time buyers, underserved consumers and borrowers whose needs fall outside traditional lending models.

At its core, the proposals are framed around inclusion, fairness and long-term sustainability, recognising that household incomes, working patterns and borrowing lifetimes are changing.

Designing Mortgages for Modern Lives

The FCA intends to simplify mortgage rules so products can better reflect varied income streams and different stages of life. This includes making it easier, faster and cheaper for borrowers to manage existing mortgages, shorten terms or switch lenders when circumstances change.

The regulator is also considering removing outdated guidance to create space for innovation and clearer digital disclosure, with the goal of improving understanding and speeding up conversations between consumers and lenders.

Consultation and Timetable

Public consultation on proposed rule changes is expected to begin in early 2026, with the FCA aiming to introduce the first reforms later that year. Alongside this, the regulator plans further work on responsible lending rules, including a reassessment of collective risk appetite and opportunities for public feedback before final decisions are taken.

Widening Access While Managing Risk

Senior FCA figures have stressed that the reforms are intended to improve outcomes for borrowers without undermining financial stability. The regulator says it will use evidence from consumers and industry to rebalance risk and widen access to affordable mortgages that better reflect real lives.

There is also an explicit acknowledgement that housing wealth plays an increasingly important role in financial wellbeing, particularly as many people save too little for later life while holding significant value in property.

Later-Life Lending Under the Spotlight

Later-life lending will form a central part of the review. The FCA plans to examine retirement interest-only requirements and launch a focused market study into whether the lifetime mortgage market is equipped to meet the needs of future customers.

Industry representatives have welcomed the attention, noting that later-life lending is no longer a niche product but an increasingly practical option for supporting retirement income, managing debt and enabling people to remain in their homes for longer. Ensuring good outcomes, fair value and consumer confidence will be key themes.

Support Tempered by Caution

While many in the property and lending sectors support greater flexibility, some have urged caution. Industry voices warn that improving access to borrowing should not distract from the need to increase the supply of affordable homes.

Others stress that flexibility must be matched with strong consumer protections, particularly around interest-only products, part-repayment options and lending later in life, to ensure borrowers fully understand long-term implications.

Data, Technology and Human Oversight

The FCA is also encouraging the responsible use of data and technology, including AI, to improve and speed up mortgage advice. However, it has emphasised the importance of maintaining human oversight to preserve accountability and trust.

Legal and industry commentators highlight the need to balance innovation with safeguards, warning that simplification and automation must not outpace protections for consumers, especially those who are vulnerable.

A Measured Path Forward

The regulator says its reforms are intended to support sustainable home ownership and broader economic growth while maintaining strong consumer protections. Many borrowers are expected to continue benefiting from regulated advice, and lenders will remain responsible for identifying customers who need additional support.

By combining consultation, market studies and phased implementation, the FCA is signalling a cautious but ambitious approach to reshaping the mortgage market for a more diverse and inclusive UK economy.

Source: Noah Wire Services

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