Concerns rise as the FCA reviews whether current mortgage rules reflect modern incomes
More than four in five mortgage brokers (83%) believe lenders have not responded quickly enough to borrowers’ changing circumstances, according to research commissioned by Nottingham Building Society. The figure is up from 52% six months ago.
The findings come while the Financial Conduct Authority (FCA) is examining whether current mortgage rules support broader access to home finance, including whether affordability testing and product design remain suitable for today’s borrowers.
Brokers surveyed pointed to a widening gap between standard lending assumptions and the way many households now earn and manage money. Among brokers who said they were worried about the outlook for the UK mortgage market, the proportion citing lenders’ inflexible approach to mortgage lending as a key factor rose from 16% to 30% over the past six months.
The research suggests the pressure is most acute for applicants who do not fit traditional affordability models. Asked which groups are most likely to be disadvantaged by mainstream affordability assessments, brokers most often named people returning from career breaks (32%). They also highlighted borrowers with multiple income streams (31%), irregular or seasonal income (29%), and those relying on bonuses, commission or overtime (29%).
More than a quarter (28%) identified self-employed applicants as another group likely to face disadvantage. Nottingham noted that almost 4.5 million people in the UK are classified as self-employed, based on the latest government statistics.
Brokers also indicated that changes to products and criteria are needed. Some 86% said it was important for lenders to develop offerings and lending criteria that work across a wider range of financial circumstances, up from 61% six months ago.
On priorities for improving outcomes, 32% of brokers said putting greater emphasis on affordability reform would have the most impact in the current market, ranking ahead of factors such as speed, pricing or process.
The broker feedback suggests that concerns focus less on weakening checks and more on how assessments are applied. The research indicates that applications involving blended or non-traditional income are more likely to stall at early stages, particularly during automated checks or initial affordability decisions, even where borrowers may be able to sustain repayments over the longer term.
“What brokers are telling us feels very real in the current climate,” said Aaron Shinwell (pictured right), chief lending officer at Nottingham Building Society. “Households are juggling higher living costs, changing work patterns, and more uncertainty, yet too many aren’t able to pass standard affordability assessments.
“Rigour in affordability matters, but so does relevance, particularly in an environment where money is tight for many. As the FCA looks again at whether the rules are fit for modern borrowing, this is a moment for lenders to be more pragmatic and human in how we assess affordability.
“That means recognising diverse income patterns, life events, and career paths — while still lending responsibly. If we get that balance right, we can support more sustainable homeownership whilst lending responsibly.”
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