Reforms aim to simplify remortgaging and boost competition
The Financial Conduct Authority (FCA) has announced a new set of changes to mortgage regulations designed to make it easier for borrowers to remortgage and reduce their mortgage terms.
The regulator said the measures are intended to help consumers manage their finances and encourage competition in the mortgage market.
The new rules will allow borrowers to shorten their mortgage terms more easily, potentially lowering the overall cost of borrowing and reducing the risk of repayments extending into retirement.
Homeowners will also find it simpler to remortgage with a different lender, which could help them secure lower rates. The changes further enable borrowers to discuss their options with lenders and access advice when needed.
The FCA emphasised that many borrowers are expected to continue receiving regulated mortgage advice. Lenders are required to identify customers who may need advice or additional support.
“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,” said Emad Aladhal, director of retail banking at the Financial Conduct Authority. “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.
“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.”
As part of the reforms, the FCA is withdrawing guidance that it says has fulfilled its purpose, aiming to reduce regulatory complexity for firms.
The regulator stated that these changes are possible due to the high standards it has established, including robust affordability checks, support for borrowers in financial difficulty, and the Consumer Duty, which requires lenders to deliver good outcomes for customers.
The FCA previously outlined these rule changes in a letter to the Prime Minister, aligning them with its broader strategy to assist consumers and promote growth. While the reforms are voluntary for lenders, the FCA encouraged firms to use the new flexibilities to expand access, foster competition, and drive innovation in the sector.
“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,” commented Paul Matthews, senior director of risk at financial services consultancy Broadstone. “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.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
