The Financial Conduct Authority (FCA) has signalled a potential shift in the regulatory landscape for mortgages, with a call for input on reforms aimed at expanding access to homeownership and adapting to changing borrower profiles.
In a newly published discussion paper, the regulator outlines a range of possible updates to its mortgage rules, targeting long-standing structural challenges in the market.
These include better support for first-time buyers, the self-employed, and those borrowing later in life or into retirement.
The move is part of the FCA’s wider five-year strategy to bolster consumer financial resilience and support sustainable economic growth.
EVOLVE MORTGAGE RULES
David Geale, executive director of payments and digital finance at the FCA, says: “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.”
Among the areas under review are responsible lending rules, the framework for later life lending and how to strike the right balance between consumer protection and innovation. The paper also explores the mortgage industry’s collective appetite for risk in a climate of shifting demographics and economic pressures.
The regulator’s appetite for reform comes at a time of notable change in the mortgage market.
In 2024, some 68% of first-time buyers took out mortgage terms of 30 years or more, many extending borrowing well into retirement age – trends that the FCA appears keen to accommodate with a more responsive regulatory framework.
RENTER VULNERABILITY
The discussion paper also draws on findings from the FCA’s Financial Lives 2024 survey, which revealed rising financial vulnerability among renters, who often face greater instability and higher costs compared with homeowners.
While acknowledging that housing supply and affordability challenges sit largely outside its remit, the FCA says it aims to ensure the regulatory regime evolves to meet borrowers’ needs in today’s market conditions.
SHIFTING DEMOGRAPHICS
Martin Stewart, director at mortgage broker London Money, told Mortgage Soup: “It’s good to see the FCA recognising that demographics are shifting and that traditional lending models need to adapt. People are borrowing more, for longer, and well into what was once considered retirement age.
“The lending rulebook needs to catch up if we want a dynamic mortgage market that works for more people.”
Lenders have already begun to respond to existing FCA guidance around flexibility, with some easing restrictions for certain borrower types. In May, the regulator also proposed updates to allow simpler mortgage changes and retire outdated guidance.
Despite continued low default rates and strong conduct standards across the sector, the FCA said that a more nuanced regulatory approach is now needed and one that balances inclusion and innovation with continued consumer protection.
The consultation runs until 19 September 2025, with any rule changes subject to further review and impact assessment.
