First-time buyers, older borrowers, and the self-employed could find it easier to get a mortgage, as the Financial Conduct Authority (FCA) sets out the next steps to help reform the market.
Its proposed mortgage rule changes would give lenders more flexibility to consider individual circumstances and develop products that better meet people’s needs – while maintaining strong consumer protections.
They include reducing barriers for lenders to offer flexible repayments for people with variable income, like the self-employed, and lend to those paid in foreign currency. They also include encouraging lenders to assess affordability based on a person’s full and current situation, rather than automatically excluding people because of minor or past credit history issues.
FCA proposes changes to help more people access mortgages | industry reaction
They further include making it easier for older homeowners to unlock wealth built up in their property by updating affordability guidance for retirement interest-only mortgages. Finally, they include updating rules on interest-only (or part interest-only) mortgages to give lenders more flexibility, while ensuring most borrowers have a clear plan to repay (unless they’re borrowing a smaller amount).
Below, industry professionals have shared their reactions to what the changes could mean for the mortgage and property sector:
David Geale, 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 who may be underserved.”
The proposals are part of the FCA’s ongoing work to help consumers navigate their financial lives and support growth. In December 2025 it set out its plans to drive reforms to the mortgage market to better meet the needs of consumers today.
The FCA has raised standards across the mortgage market over time, including through the Consumer Duty. The proposals build on that foundation – rebalancing risk to help more people access mortgages while keeping appropriate safeguards in place, including supporting consumers in understanding their options.
As part of gathering feedback on the proposals, the FCA is using an online tool to hear directly from consumers about their experiences of the mortgage market. Alongside feedback from firms and others, this will help make sure consumers’ voices help shape the FCA’s approach.
The FCA is encouraging consumers, firms and all interested parties to respond to the consultation and share their views by 28 July 2026.”
Sarah Coles, head of personal finance at AJ Bell, comments:
“Mortgage rules are set to ease again, as the FCA considers loosening more of the restraints applied to the mortgage market after the financial crisis. It’s trying to identify the right balance between risk management and flexibility, so it opens the door for more sensible lending, without opening the floodgates to more questionable arrangements.
Developing products to better suit people’s lives makes perfect sense. Self-employed people with lumpy incomes have been forced to contort their finances into paying the same sums each month under existing rules. A change could allow them to access products that are flexible enough to fit around their lives and their needs instead.
Taking a more holistic approach to borrowers will also avoid the current situation where someone who has met all their financial responsibilities for years can be ruled out because of a small mistake they made years ago, when their life may have looked completely different.
But mortgages are just one part of the picture. A healthy housing market also needs enough affordable properties, plus tax rules that don’t distort buyer behaviour and put people off. The flow of first-time buyers also depends on people being able to build healthy deposits. This can be a huge challenge when they’re also having to cover the cost of sky-high rents.
The Lifetime ISA has helped hundreds of thousands of people onto the property ladder. If you qualify, it’s a brilliant way to get a government bonus of up to £1,000 a year for your house purchase. The government is planning to consult on an alternative to the LISA, but if you get in now, you’ll be able to keep using it indefinitely, so it could be worth getting started sooner rather than later.”
Tony Müdd, Third Party Products & Services Director at St. James’s Place, says:
“The FCA’s proposals are a positive and practical development that should deliver real benefits for clients. By giving lenders more flexibility to assess affordability based on individual circumstances, rather than rigid rules around past credit issues or variable income, many more self-employed clients, first-time buyers, and older homeowners will find it easier to access the mortgage they need.
The updates to retirement interest-only and interest-only mortgages are particularly welcome. They will help clients unlock housing wealth in later life, supporting retirement income planning and helping meet long-term care costs, while maintaining strong consumer protections.
Professional advice, however, will remain essential to navigate these options safely and align them with individual circumstances. This rebalancing should support more clients in achieving their financial goals.”
Richard Pinch, Head of Banking and Credit Advisory at leading independent financial services consultancy Broadstone, comments:
“The FCA’s 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.
The regulator is seeking to give lenders greater flexibility through affordability assessments that better reflect real borrower behaviour and lifetime earnings patterns. The proposals could be particularly beneficial for groups that have historically found it more difficult to access mortgage finance, including the self-employed, those with variable income and older borrowers.
Granting lenders more scope to consider an applicant’s full financial circumstances rather than relying on rigid criteria should help widen access without compromising consumer protection. It could also support the use of more sophisticated affordability modelling, powered by advances in data analytics and AI, meaning lenders should already be considering how they can use these tools to better understand and serve customers’ needs.
Importantly, the FCA is not proposing a return to the looser lending standards seen before the financial crisis. Instead, it is seeking to modernise the framework to reflect today’s labour market and demographics, while retaining the strong safeguards that have helped underpin the resilience of the mortgage market.”
Karen Noye, mortgage expert at Quilter:
“The proposals from the FCA acknowledge that the mortgage market 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.
Current affordability assessments can be limiting for those looking to get onto the property ladder, and a shift towards a more holistic approach whereby someone’s full current financial situation is considered, rather than historical credit issues immediately closing the door to homeownership, would be a positive step forward.
“However, there will naturally be a delicate balancing act when it comes to widening access. Looser rules around affordability and lending structures, particularly around interest-only offerings or borrowing later in life, may help to improve access in the shorter term, but it will be vital that borrowers do not make unsustainable commitments that could impact them further down the line.
We have already seen a significant increase in people taking mortgages that they will be paying well into their retirement years, and this risks having a knock-on impact on their financial security and quality of life when more of their income is going on housing costs than they might have planned for.
“Wherever possible, anyone looking to get onto the property ladder or considering making changes to their mortgage repayments should seek the support of a professional mortgage adviser wherever possible. The mortgage market is constantly evolving, so being able to make decisions that are well informed and appropriate for your long term financial security is key.”
Michael Shand, managing principal at financial services and technology consultancy Capco, comments:
“Today’s announcement from the FCA is a positive step forward in the continued efforts to modernise the mortgage framework so it better reflects changing consumer circumstances. First-time buyers, older borrowers, and the self-employed have historically faced structural gaps that have prevented even financially viable people from accessing suitable lending, so moves to support more flexible lending for these groups are especially welcome.
The focus on allowing lenders to consider a more holistic view of borrower’s finances is also positive. Moving beyond rigid or overly binary affordability assessments will be helpful in allowing lenders to better reflect the realities of modern income patterns and cater for those with variable earnings or more complex financial profiles.
It’s also encouraging that the regulator is actively seeking input from consumers throughout the consultation process, using real borrower experience to shape the future of the rules. This should hopefully result in a final set of regulations that strike the right balance between access, protection and practicality.
That said, affordability is still the biggest issue for consumers right now. With interest rates looking like they may soon be on the rise again and economic uncertainty only increasing, many individuals simply do not have the borrowing capacity or confidence needed. Therefore, while relaxed rules may ease supply-side barriers, the broader economic environment could prevent many consumers from accessing the mortgage arrangements they want.
More broadly, increased flexibility could also support product innovation, particularly in underserved areas such as later life lending, where clearer rules could support the development of more tailored products and improved outcomes for older consumers. However, firms will need to carefully manage how they incorporate broader data sources and more nuanced underwriting approaches, ensuring that risk frameworks, governance and Consumer Duty obligations remain robust.
Overall, the direction of travel is positive, but the success of these proposals will depend on how effectively firms put the additional flexibility into practice while maintaining appropriate protections. Meaningful engagement from both industry and consumers during the consultation will also be key.”
Julian Sampson, Partner and Head of Lending Department at TWM Solicitors, a leading commercial law firm commnets:
“The FCA is announcing mortgage rule changes that should improve the supply of mortgages to underserved markets such as the self-employed, the elderly and borrowers with weak credit histories.
Julian Sampson says, “There are still significant parts of the UK’s population who struggle to access competitively priced mortgages so any encouragement from the regulator which will support mortgage innovation should be welcomed.
The elderly and the self-employed are two critical markets that are expected to continue to grow. The tough economy of the last few years has meant a lot of people picking up minor marks against their credit histories that don’t reflect their current ability to service a mortgage.
The rise in credit repair lending is a necessary reflection of the economic climate, and having a regulator who can acknowledge the difficulties of adverse borrowers within a supportive and transparent framework can only be a positive sign that credit repair lending, managed well, must be a viable pathway for borrowers looking to move past previous credit issues.
The ageing population is creating an immovable lock up of equity as they are unable or unwilling to downsize without viable mortgage products to support them in doing so.
If they were more easily able to downsize, they could release housing stock into the market and cash into the economy. The retirement interest-only mortgage has not been as popular as one might think, so any means of loosening the terms of this product must be welcomed.
Ultimately, these changes will be welcomed by many of our Specialist Lender and Building Society clients who, time and again, are challenging the norm in how to lend to borrowers by structuring their lending in an innovative way without creating risks.”
