The Financial Conduct Authority (FCA) has confirmed a package of reforms to mortgage rules aimed at simplifying the remortgaging process, supporting aspiring homeowners, and promoting growth through a more competitive mortgage market.
Announced last night, the changes are designed to help borrowers save time and money by reducing unnecessary complexity in mortgage transactions.
The reforms form part of the FCA’s broader strategy to help consumers navigate their financial lives while fostering innovation and greater choice within the mortgage market.
Under the new rules, borrowers will find it easier to reduce their mortgage term, cutting the total cost of borrowing and minimising the risk of debt extending into retirement; remortgage with a new lender, increasing access to more competitive deals; discuss mortgage options with their provider and receive advice when required.
PROTECTING CUSTOMERS
Lenders are expected to continue offering regulated mortgage advice and to identify customers who may need further support, ensuring consumers remain protected while benefiting from streamlined processes.
Emad Aladhal, director of retail banking at the FCA, says: “We are helping more people navigate their financial lives by supporting those who can afford to buy a home and supporting competition in the mortgage market.
“Consumer needs have changed over recent years, and our rules are changing too. Today’s changes support growth by simplifying some of our rules, saving consumers time and money, while ensuring they still benefit from advice, where needed.
“We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers.”
And he adds: “These reforms are another significant step in our mortgage rule review, which we’re delivering quickly. They are supported by the strong protections we’ve already put in place for consumers in the mortgage market.”
OUTDATED GUIDANCE
The reforms include the removal of outdated guidance, reducing regulatory burdens on lenders.
The FCA stated that these steps have been made possible due to the strength of existing standards, such as robust affordability checks, borrower support protocols and the Consumer Duty – which requires lenders to act in customers’ best interests.
Although implementation of the changes is voluntary, the FCA is encouraging firms to embrace the new flexibilities to broaden access to homeownership, strengthen market competition and drive innovation.
The regulator reiterated that a sustainable and dynamic mortgage market is a “collective responsibility” shared between regulators and firms.
The changes were outlined earlier this year in the FCA’s letter to the Prime Minister and align with its broader strategic goals to support consumers and stimulate long-term economic growth.
AFFORDABILITY CONSTRAINT
Karen Noye, mortgage expert at Quilter, says: “While lenders had been trimming rates in anticipation of further base rate cuts, the higher-than-expected CPI figure released this month may delay that trajectory.
“For buyers, this means affordability remains a key constraint – regardless of these changes – particularly for those relying on fixed-rate deals to manage stretched budgets.
“Ultimately, seeking professional mortgage advice will be key to ensuring you find the best deals and make the best possible choices for your circumstances.”
EASIER FOR CONSUMERS
Paul Matthews, Senior Director of Risk at independent financial services consultancy Broadstone, adds: “The FCA is taking significant steps to make it easier for consumers to make changes to their mortgages and get better support on their available options.
“The easing of regulation will allow lenders greater flexibility to innovate in the market and provider homeowners with more choice.
“Mortgage lenders operate in a highly regulated environment and so these latest reforms should support more flexible home ownership with minimal additional risk.
“Lenders will need to ensure their risk management and modelling framework is robust so they can continue to spot those consumers who need advice or other support.”
