Big mortgage shake-up proposed in the UK – what it means for you
Key Points
- The FCA has proposed changes to UK mortgage lending rules to help first-time buyers, self-employed workers and older borrowers access home loans.
- Lenders would get more flexibility to assess affordability based on someone's full financial situation, rather than rejecting applicants over minor or past credit issues.
- People with variable incomes could access mortgages with more flexible repayments, and lenders could offer more interest-only deals where suitable.
- The FCA acknowledged wider access brings some risk, but said 99% of mortgages taken out since 2014 are on track and arrears are at historic lows.
- The consultation is open until 28 July 2026, and consumers can share feedback through the FCA's online tool.
The Financial Conduct Authority (FCA) has proposed changes to mortgage lending rules that could make it easier for first-time buyers, self-employed workers and older borrowers to get a home loan.
The regulator’s consultation, which runs until 28 July 2026, sets out plans to give lenders more flexibility when assessing whether someone can afford a mortgage.
Emad Aladhal, the FCA’s director of retail banking, said the changes aim to help people access a mortgage that fits how they live today.
“Buying a home is different now to even a decade ago,” he said. “People are living longer, the way they work has changed and, for many, how much they earn can vary month to month.”
Under the proposals, lenders would be encouraged to take a rounded view of an applicant’s finances rather than applying a standard template.
The FCA said this should unlock access for people who can afford a mortgage but currently struggle to get one.
The changes could mean people with variable incomes, such as the self-employed, can get a mortgage with more flexible repayments. Older homeowners may also find it easier to access wealth stored in their property to fund their retirement.
The regulator also wants lenders to assess affordability based on someone’s full and current situation, so applicants are not dismissed because of minor or past credit issues.
Lenders would also have more flexibility to offer interest-only mortgages where suitable.
Regulator acknowledges the risks
The FCA acknowledged that widening access to mortgages comes with trade-offs.
Aladhal said more people borrowing, particularly those with less certain incomes, brings a risk that they may struggle to cope with unexpected financial shocks such as unemployment or ill health.
However, he argued that the long-term risks of people being unable to get on the housing ladder are often underpriced.
“Renting is usually more expensive and can be less secure than owning your own home. While renting into retirement brings its own challenges,” he said.
The regulator pointed to the resilience of the current market, noting that 99% of mortgages taken out since 2014 are on track and arrears remain at historically low levels despite recent interest rate rises.
Core affordability requirements will remain in place, and lenders must still make responsible decisions on who to lend to.
Aladhal said feedback received so far, along with the FCA’s own research, suggests any slight increase in risk is manageable while delivering benefits to more consumers.
The FCA is asking consumers what the changes will mean for them, whether the reforms go far enough and whether the risks are balanced correctly.
Consumers can share their views through the regulator’s online feedback tool before the consultation closes on 28 July 2026.
