The Financial Conduct Authority (FCA) has proposed a series of changes to mortgage lending rules aimed at improving access to borrowing for first-time buyers, self-employed workers and older homeowners.
The regulator said the reforms would give lenders greater flexibility to assess affordability and design products that better reflect borrowers’ individual circumstances, while maintaining existing consumer protections.
Among the proposals are changes designed to make it easier for lenders to consider applicants with variable incomes, such as the self-employed, and those paid in foreign currencies. The FCA also wants lenders to take a broader view of affordability assessments, rather than automatically excluding borrowers because of minor or historic credit issues.
The regulator has also proposed updates to rules covering retirement interest-only and interest-only mortgages, which it says could provide older homeowners with greater flexibility when accessing housing wealth or arranging borrowing later in life.
David Geale, executive director for payments and digital finance at the FCA, said: “We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow. Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.”
The proposals form part of the FCA’s wider programme of mortgage market reform, first outlined in December 2025, which aims to ensure lending rules better reflect the needs of today’s borrowers.
The regulator said the changes would build on existing consumer protections, including the Consumer Duty, while giving lenders greater flexibility to assess risk and serve a wider range of customers.
As part of the consultation, the FCA is seeking feedback from consumers, lenders and other stakeholders. It has also launched an online tool to gather evidence directly from borrowers about their experiences of the mortgage market.
The consultation is open until 28 July 2026, after which the regulator will consider responses before deciding whether to implement the proposed changes.
Karen Noye, mortgage specialist at Quilter, commented: “The proposals from the FCA acknowledge that the mortgage market has failed to keep pace with how people live and work today, and allowing greater flexibility in assessing affordability and repayments could help prospective borrowers who have more complex incomes such as the self-employed. Current affordability assessments can be limiting for those looking to get onto the property ladder, and a shift towards a more holistic approach whereby someone’s full current financial situation is considered, rather than historical credit issues immediately closing the door to homeownership, would be a positive step forward.
“However, there will naturally be a delicate balancing act when it comes to widening access. Looser rules around affordability and lending structures, particularly around interest only offerings or borrowing later in life may help to improve access in the shorter term, but it will be vital that borrowers do not make unsustainable commitments that could impact them further down the line. We have already seen a significant increase in people taking mortgages that they well be paying well into their retirement years, and this risks having a knock-on impact on their financial security and quality of life when more of their income is going on housing costs than they might have planned for.
“Wherever possible, anyone looking to get onto the property ladder or considering making changes to their mortgage repayments should seek the support of a professional mortgage adviser wherever possible. The mortgage market is constantly evolving, so being able to make decisions that are well informed and appropriate for your long term financial security is key.”
