Calls for mortgage rule changes have prompted the Financial Conduct Authority (FCA) to launch a series of proposed measures directed at enhancing access to borrowing for older homebuyers, self-employed workers, and first-time buyers. Although over 99% of mortgages originated since 2014 remain on track for successful repayment, escalating property prices, delayed retirement trends, and shifting consumer preferences have raised concerns that the current mortgage system does not accommodate contemporary circumstances.
Accordingly, the FCA is aiming to ease restrictions and lending rules in order to cater to a variety of financial backgrounds. As part of this effort to broaden flexibility, the FCA is seeking feedback from lenders, stakeholders, and consumers under an open consultation period ending on 28 July 2026. This feedback will contribute towards the FCA’s understanding of the practical considerations that consumers and lenders encounter.
FCA Proposals
The essence of the proposals is improving flexibility. The FCA is aiming to empower lenders to take a broader criterion in assessing affordability and designing products that take into greater consideration the consumers’ specific circumstances.
For example, one such proposal is for lenders to consider consumers with variable incomes – chief among whom are self-employed workers – as well as those paying in foreign currencies. The FCA is also encouraging lenders to take a wider perspective on affordability assessments. The proposed criterion focuses on assessing the current financial situation instead of disqualifying a consumer based on historic or minor credit issues.
Specific attention has likewise been directed towards helping older homebuyers by updating the rules for retirement interest-only or interest-only mortgages. In 2025, lifetime mortgages were 26,974, whereas retirement interest-only mortgages to over-55s reached 3,002. Conversely, mainstream repayment mortgages almost reached 300,000, and interest-only mortgages nearly reached 65,000.
In turn, the FCA is focused on overhauling some of the rules for interest-only mortgages to support prospective older homebuyers. Similarly, the FCA wants to make it easier for older homeowners to utilise the wealth accumulated in their property by updating affordability guidance for retirement interest-only mortgages.
David Geale, the executive director for payments and digital finance at the FCA, said: ‘We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow. Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.’
Industry Reaction
Industry analysts have reacted positively to this news, citing the commitment by the FCA to amend current lending practices in line with the financial and practical circumstances of individual consumers.
For example, Michael Shand, the managing principal at Capco, commented that the FCA is taking ‘a positive step forward in the continued efforts to modernise the mortgage framework so it better reflects changing consumer circumstances.’ Shand reflected that taking a more holistic view of borrowers’ finances is ‘positive’, arguing that the system should move ‘beyond rigid or overly binary affordability assessments’.
On a similar note, Richard Pinch, the head of banking and credit at Broadstone, argued that these proposals ‘represent a sensible evolution of the mortgage market, recognising that traditional affordability assessments do not always reflect the realities of modern working patterns, income streams and borrowing needs.’
Karen Noye, the mortgage specialist at Quilter, agreed that the current lending system ‘has failed to keep pace with how people live and work today, and allowing greater flexibility in assessing affordability and repayments could help prospective borrowers who have more complex incomes such as the self-employed.’
Noye cautioned that ‘there will naturally be a delicate balancing act when it comes to widening access’, which is why ‘it will be vital that borrowers do not make unsustainable commitments that could impact them further down the line.’ Because the ‘mortgage market is constantly evolving,’ Noye concluded, ‘being able to make decisions that are well informed and appropriate for you long term financial security is key.’
A Holistic Approach
The overall intention behind the FCA’s proposals is to modernise the current lending system. In particular, there has been an assertive effort to broaden mortgage accessibility to a variety of prospective consumers, tailoring mortgage schemes to individual circumstances.
For Q1 2026, the FCA identified that the value of new mortgage commitments increased by 11.5% from the previous quarter to £78.0 billion. It is 14.2% higher than the previous year. By embracing a holistic approach to mortgage accessibility, the FCA aims to facilitate a greater entry of prospective homebuyers into the UK property market.
