Innovation, constraints and Consumer Duty: what 2026 will really change in mortgage product design

For Katherine Stagg, director at Stagg Mortgages, 2026 will not be defined by flashy technology or headline-grabbing launches. Instead, she expects the year to hinge on something more fundamental: how lenders assess real-world borrowers, how they evidence good outcomes, and how effectively brokers keep pace with rapidly shifting criteria.

“More flexible affordability models, especially for borrowers with variable income,” sit at the top of her list. Alongside that, she anticipates “continued growth in green and energy-efficiency-linked products”, a “sharper focus on Consumer Duty outcomes”, and “potential movement around longer-term fixed rates and products that offer more stability without locking borrowers in punitively”.

For brokers, Stagg believes, the challenge will be staying ahead of that change. “It’s about staying close to criteria changes, strengthening vulnerable-customer processes, and being ready to articulate the value of advice in a market where choice and complexity are both increasing.”

Those themes are already visible in how lenders are thinking about innovation and constraint — and they offer a clear indication of how 2026 is likely to reshape mortgage product design.

From rulebook to design brief: Consumer Duty’s real impact

READ MORE: How Gen H is rethinking mortgage innovation

Stagg’s expectation of a sharper Consumer Duty focus is already being borne out in lender behaviour. Rather than adding a single new compliance hurdle, Duty has begun to change how products are conceived in the first place.

Lenders are increasingly expected to demonstrate who a product is for, what value it delivers, and how suitability holds up over time — not simply at the point of completion. That is pushing design conversations in a more disciplined direction: starting with the intended outcome, then working backwards to structure, criteria and safeguards.

Peter Dockar, chief commercial officer at Gen H, sees that shift as overdue rather than optional. “Our start point is: is owning your home better than renting? And we think the answer to that is yes,” he says — a framing that reflects what regulators increasingly expect to see when new structures are brought to market.

At broker level, Stagg expects the impact to be practical and immediate: tighter documentation, more structured approaches to vulnerability, and clearer explanations of value — all of which must be evidenced, not simply assumed.

Affordability models: flexible, not lax

If there is one area where Stagg expects the most visible change, it is affordability.

That means better treatment of second jobs, self-employment, bonuses and irregular earnings — but not a return to looser standards.

Some lenders are already moving in this direction, placing greater emphasis on bank-statement analysis, expenditure modelling and stress-testing affordability under pressure, rather than relying on blunt income multiples. The objective is not to stretch affordability, but to reflect the reality of a labour market in which portfolio careers and non-standard pay patterns are increasingly common.

For brokers, the implication is clear. Generic assumptions about “four-and-a-bit times income” are no longer sufficient. Successfully placing complex cases will depend on understanding which lenders genuinely accommodate variable income — and what evidence and narrative each expects to see.

Green products and long-term thinking move centre stage

READ MORE: Later-life lending needs a rethink on green finance

Stagg also expects green and energy-efficiency-linked lending to move decisively from niche to mainstream.

“Regulatory pressure around EPC ratings is only going to intensify,” she says. That will drive growth in products that reward better-performing properties or support improvement works, but it will also shift risk conversations. Brokers will increasingly need to help clients think about the long-term implications of holding inefficient stock — in terms of regulation, valuation and resale.

She also anticipates “potential movement around longer-term fixed rates and products that offer more stability without locking borrowers in punitively”. After several years of rate volatility, demand for predictability is strong, but so is borrower wariness about being trapped in unsuitable deals.

Here, innovation is likely to be incremental rather than dramatic: refinements to early-repayment charges, more nuanced break options, and product designs that balance security with flexibility over the life of the loan.

Process and journey: where Consumer Duty bites for brokers

Crucially, Stagg stresses that innovation is not limited to products. A sharper focus on Consumer Duty outcomes is also driving changes in processes and documentation, as lenders look to demonstrate clear value and suitability. For brokers, this is already showing up in longer fact-finds, more detailed vulnerability assessments and more explicit suitability letters.

Conveyancing delays, poor communication and fragmented data flows are increasingly viewed as outcome issues rather than mere operational frustrations. Some lenders — including those experimenting with in-house conveyancing — are attempting to create more joined-up journeys. Brokers may feel this most acutely in the volume and quality of information they are expected to gather and record.

What brokers should do now

Stagg’s outlook for 2026 is not pessimistic. She sees opportunity — but only for brokers who are proactive.

“For brokers, the key will be staying close to criteria changes, strengthening vulnerable-customer processes, and being ready to articulate the value of advice,” she says.

That means:

• tracking affordability and green-lending changes at lender level, not just via headline rate sheets

• investing in Consumer Duty processes that stand up to scrutiny

• and sharpening the client-facing explanation of why advice matters as products become more tailored and the stakes higher

Innovation, Stagg argues, is opening up cases that previously would have failed — particularly for borrowers with variable income, complex circumstances or greener ambitions. But it is also raising expectations around explanation, evidence and judgement.

By 2026, mortgage innovation is likely to be less about spectacle and more about discipline. Brokers who embrace that shift, and position themselves as guides through a more complex, more constrained landscape, will be best placed to thrive.