Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
First-time housebuyers, the self-employed and pensioners could find it easier to get a mortgage in the UK under plans to loosen restrictions on lenders announced by the financial watchdog on Monday.
The Financial Conduct Authority said there were several areas where it could reform its mortgage rules to “widen access, support sustainable home ownership, support growth and improve lives”.
The planned easing of mortgage rules is part of the FCA’s push to encourage banks to take more risks as it responds to government calls for further measures to boost UK economic activity.
The watchdog already watered down some restrictions this year, contributing to strong growth in the mortgage market. It estimates the changes have allowed lenders to offer about £30,000 more to the average housebuyer.
UK net mortgage approvals hit their highest level of the year in September, according to the Bank of England. The trade body UK Finance estimated banks increased their total lending for home purchases by 22 per cent to £176bn this year and predicted a further 2 per cent growth in 2026.
“We’ll use insight from consumers and industry to drive further reforms and rebalance risk — helping to widen access to affordable mortgages,” said David Geale, executive director for payments and digital finance at the FCA.
“Reforming the mortgage market can help address the fact that as a society we’re saving too little for later life, yet people have huge wealth tied up in property,” he said.
The rules on more flexible products, such as “part-and-part mortgages” on which only some of the loan is repaid before it matures, could be made easier to help more first-time buyers get on the property market.
Other changes being considered by the FCA could help those with variable or lumpy income, such as self-employed people, to get mortgages as well as those who have had bad debts in the past but have since improved their credit rating.
It also plans to examine how innovative products, such as retirement interest-only mortgages, could help older people raise money against the value of their home or repay an earlier mortgage that is maturing.
Nikhil Rathi, chief executive of the FCA, said in a speech last month that 43 per cent of people were projected not to be saving enough for retirement despite an expected high rate of home ownership.
“How will households meet retirement goals, needs and potential care costs?” said Rathi. “Can some of the nation’s £9tn of housing wealth be unlocked more effectively, and put to more productive use, particularly to sustain living standards in later life?”
The FCA said it would launch consultations on its planned rule changes early next year, including measures to encourage artificial intelligence to be used to improve and speed up mortgage advice. It aims to start making changes by the end of 2026.
It will launch a market study to examine “how the later-life lending market could develop to meet the different needs of future consumers”, including allowing more holistic advice on the range of financial options available to people in retirement.