The FCA‘s ongoing review of mortgage rules highlights the need for lending practices to better align with the evolving profiles of today’s borrowers. With increasing numbers of people self-employed, borrowing later in life, or navigating portfolio careers, the regulator’s proposed changes aim to make mortgage access more equitable and practical for a wider range of consumers.
Experts from across the mortgage and property sector have shared their views below.
Commenting on Canada Life UK’s response to the FCA’s DP 25/2: Mortgage Rule Review, Pete Maddern, Managing Director of Retirement, Canada Life UK says:
“We welcome the opportunity to respond to the FCA’s Mortgage Rule Review Discussion Paper, which opens up an important conversation about the role that later life lending can and should play in sustaining income standards in retirement.
For many individuals retiring now and in the future, pension savings alone will be insufficient to meet income needs. Our Life100+ research programme1 highlights the longevity trend reshaping retirement; people are living longer, meaning their financial resources will need to stretch further. Yet the FCA has found 2 that one third of adults with a defined contribution pension have less than £10,000 saved. With property wealth representing 40% of total household wealth in Great Britain 3, unlocking this resource through later life lending will be critical to ensuring financial security and quality of life in later years.
The value of financial advice cannot be overstated. It empowers customers to make informed choices, plan with confidence and maximise their hard-earned savings in retirement. However, aspects of the current regulatory framework could be improved to ensure that advice considers all sources of wealth holistically.
In our response to DP 25/2, we call on the FCA to consult on a reshape of the regulatory framework so that it better aligns with customer needs rather than being restricted by product categories. A significant step forward would be to equip advisers with the right qualifications and knowledge to consider all sources of wealth in retirement planning. For example, requiring all level four advisers to explicitly factor in a customer’s property wealth into retirement discussions, or introducing a compulsory qualification in equity release. Breaking down these regulatory silos will be crucial to unlocking financial planning that looks at the full financial picture of a customer – including their property wealth.
Of course, it will take time to shape, embed and realise the benefits of these changes. In the shorter term, we encourage the FCA to review the information provided by government-backed services such as MoneyHelper and Pension Wise, to ensure that the consideration of property wealth is embedded in their information, guidance and tools, especially those focused on retirement planning. This will better support customers exploring how to fund their later life and retirement.”
Jonathan Stinton, Head of Intermediary Relationships at Coventry for Intermediaries,comments:
“It’s good to see the regulator recognising that the pendulum may have swung too far since 2008, and that a more balanced approach is needed.
These proposals are a shift to recalibrate the industry in a sensible way, and that’s ultimately good news for borrowers. Revisiting the approach to remortgaging could make it far more accessible, and giving borrowers easier access to interest-only and part-and-part options means they can better adapt to life’s ups and downs – whether that’s fluctuating income or planning for later life.
Of course, regulatory measures are just one piece of the puzzle. There is a risk that loosening affordability rules could fuel house price inflation rather than widen access to homeownership. Until the housing shortage is addressed, changes to affordability and product design will only go so far. If we want to build a more sustainable, accessible market, any reforms must go hand in hand with a meaningful push towards housebuilding.
Whatever changes come, brokers will remain central to helping clients make sense of their options. Their role in guiding people through product transfers, remortgages and all the complexity in between is essential. By helping borrowers navigate these changes, brokers can make sure people don’t just access products more easily, but they’re choosing options which truly support their long-term goals.”
Michael Shand, Managing Principal at consultancy Capco, comments:
“The FCA’s review of mortgage rules recognises the need for lending to adapt to current borrower profiles. With more people self-employed, borrowing later in life or pursuing portfolio careers, the regulator’s proposals could make access to mortgages fairer and more practical for a diverse consumer base.
The potential impact is significant. Simpler rules and reduced advice requirements in low-risk cases can make it easier for people to buy their first home or progress through different stages of ownership. Lenders also have an opportunity to use data and technology to design products that reflect modern borrowers.
Greater flexibility does create added complexity. Lenders will need to balance innovation with responsibility, ensuring that more personalised products remain robust if economic conditions change. Done well, the FCA’s reforms could pave the way for a more inclusive and innovative mortgage market.”
