The regulator will be looking at the potential of updating its responsible lending rules to allow for wider access to 'sustainable home ownership' as well as rebalancing the collective risk appetite in mortgage lending. Other areas it will focus on including making sure the regulatory framework and mortgage market are prepared for future increases in later life lending demand.
It also says it will look to introducing more flexibility to allow lenders to innovate.
In May, the regulator announced that it would be consulting on proposals for consumers to more easily make certain changes to their mortgage and engage with their provider.
This work to reform mortgage rules was included in the FCA’s new strategy, which commits the regulator to helping consumers navigate their financial lives and help growth. The measures were also included in a letter to the Prime Minister, which detailed changes to support economic growth.
As part of this work, the FCA has talked to firms about the flexibility already available when checking if someone can afford a mortgage, which the regulator says has alrady helped more borrowers access mortgages.
Feedback on the discussion paper will close on 19 September.
David Geale, executive director for Payments and Digital Finance, said:
“We want to evolve our mortgage rules to help more people access sustainable home ownership. Having achieved higher standards in the market, now is the time to consider allowing more flexibility in a trusted market.
“Changing our mortgage rules could make it easier for people to get onto the property ladder and manage mortgages into retirement.
“We can’t solve all the issues related to home ownership. But we’re playing our part in helping people better use the mortgage market to navigate their financial lives and to encourage a dynamic, innovative and competitive market.”
Regarding the focus on later life lending, Pete Maddern, managing director of retirement at Canada Life, said:
“Property is often the single largest asset for those approaching or at the point of retirement. With more people living longer and many under-saving into pensions, it’s vital that housing wealth becomes a core part of financial planning for later life, alongside pensions and other savings.
“Canada Life’s own data reveals an increasing proportion of people releasing equity to cover day-to-day living costs from Q1 2024 to 2025, suggesting there is a growing reliance on property wealth to meet essential needs in retirement. In addition, equity release is also commonly used to fund aspirations such as home improvements, gifting to family, or even supporting long-term care.
“It’s encouraging to see the FCA recognise the positive role that the later life lending industry can play in providing financial stability and flexibility in later life. As customer needs continue to evolve, now is the time to rethink the regulatory framework to break down silos and enable truly joined-up, holistic retirement planning.”
Paul Broadhead, head of mortgage and housing policy at the Building Societies Association (BSA) said:
"Since the financial crisis, it is clear that the regulatory pendulum has swung too far towards caution, prioritising detailed rules at the expense of access to the benefits of homeownership for many creditworthy families. We therefore welcome the Financial Conduct Authority’s (FCA’s) Discussion Paper exploring the future of mortgage lending for all types of borrowers. Alongside the Government's promised long-term housing strategy, this review provides a crucial opportunity to shape the UK mortgage market for the next decade and beyond.
"Over the summer we will engage with our members and carefully consider our response. I expect some very lively discussions as we explore both the risks and opportunities across all areas of mortgage regulation. In doing so, it’s important that we don’t jeopardise the consumer confidence and trust we have built in the mortgage market since 2008, but we must be radical and ambitious in our thinking to ensure we achieve a framework that enables us to support more people on their homeownership journey both now and in the future.
"We must be mindful of the way people live today and ensure that all proposals are future-proofed. Wide ranging reviews of the mortgage market are rare so this is potentially a once in a generation opportunity. The outcome of both this review and a supply-side plan from Government must together create an environment where homes are more affordable, more available and more appropriate to the needs of those who will live in them. It is incumbent on us today to contribute to the design of an innovative, flexible and sustainable mortgage market that meets the needs of current and future generations."
