Regulator plans changes for first-time buyers, later life lending and vulnerable borrowers
The Financial Conduct Authority (FCA) has set out plans for a wide-ranging overhaul of the UK mortgage market, aiming to widen access for first-time buyers, the self-employed and older homeowners while strengthening protections for vulnerable borrowers.
Under the proposals, which are framed as priorities for the coming years, the regulator wants mortgage rules to better reflect modern working patterns, changing income profiles and the growing importance of housing wealth in retirement planning.
A central strand of the work will focus on first-time buyers and other underserved groups. The FCA is considering ways to simplify aspects of the rulebook so lenders can develop more flexible products, including options that take account of variable and non-traditional income over the course of a borrower’s working life.
Later life borrowing will form a second pillar of the programme. The FCA intends to review requirements for retirement interest-only mortgages with a view to making them easier to access, and will look at how advice in this area can be improved so consumers can plan with greater confidence for their later years. It also plans a targeted study of the lifetime mortgage market to test whether it is equipped to meet the evolving needs of future customers.
Innovation and disclosure standards are also under scrutiny. The regulator wants to encourage greater use of data and technology, including artificial intelligence, to help intermediaries deliver quicker, more tailored advice while maintaining human oversight. At the same time, it will examine whether advertising and disclosure rules can be simplified so that information provided online is easier for consumers to understand.
A further priority is the protection of vulnerable borrowers. The FCA plans to work with partners across the sector to support customers affected by financial abuse and to assist those using mortgages as a way to manage or consolidate wider debts.
“We have worked at pace this year to improve outcomes for customers wanting a mortgage,” said David Geale (pictured right), executive director for payments and digital finance at the FCA. “We’ll use insight from consumers and industry to drive further reforms and rebalance risk – helping to widen access to affordable mortgages to meet the needs of consumers today.
“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.”
The FCA expects to begin consulting on specific rule changes across the four areas from early 2026, with the first amendments to its rules anticipated later that year.
Alongside this, the regulator will launch a focused market study on later life lending. That work will examine how the sector might develop to serve future cohorts of older borrowers and how regulation can support responsible innovation, ensuring access to products that offer fair value and are suited to customers’ needs. The FCA plans to publish the study’s terms of reference in the first quarter of next year.
“This is a welcome recognition that the mortgage market must better reflect modern working lives and changing borrower needs,” said Mary-Lou Press, president of industry body NAEA Propertymark. “Greater flexibility for first-time buyers, the self-employed, and those with non-traditional or later-life income has the potential to unlock home ownership for groups who have historically been underserved.
“Moves to simplify rules, modernise affordability assessments and responsibly embrace innovation such as rental payment data and AI-driven advice could make a meaningful difference, provided robust consumer protections remain in place.
“As affordability pressures ease and lenders adapt following changes to stress testing, reforms should be introduced in a measured way, alongside clear advice and transparency. Ensuring consumers fully understand their options, particularly around interest-only, part-repayment and later life lending, will be key to supporting sustainable home ownership both now and in the future.”
Earlier in March 2025, the regulator reminded firms of the flexibility available in interest rate stress testing. Lenders subsequently adjusted their approaches, which the FCA said has broadened borrowing options and reduced affordability constraints, enabling many customers to borrow around £30,000 more than they otherwise could.
Despite the pressure from higher interest rates and increased living costs, the FCA reports that 99% of mortgages originated since 2014, when stricter lending standards were introduced, are not currently in arrears.
“The fact that the vast majority of mortgages remain out of arrears shows the current system is fundamentally sound, but also that there is room to carefully widen access without increasing risk,” Press said.
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