Mortgage advisers are increasingly using modified affordability assessments to move borrowers to new lenders following changes to underwriting rules, FCA data obtained by Stonebridge shows.

The number of modified affordability assessments used for product transfers fell from 550 to 100 in the first quarter of 2026, an annual decline of 81.8%.

Overall use of the assessments for remortgaging nevertheless rose by 30.2% to 5,828 during the quarter. The proportion involving a move to a new lender increased from 87.7% to 98.3%.

Product transfers consequently accounted for 1.7% of remortgages using modified affordability assessments, down from 12.3% in the same period last year.

The growth came despite the number of lenders using the assessments falling from 12 in the second half of 2025 to eight in the first quarter of this year.

FCA RULE CHANGES

The FCA amended its rules on July 21 last year, allowing lenders to use modified affordability assessments when borrowers want to reduce their mortgage term or when a loan from a new lender is more affordable than either their existing mortgage or a new product offered by their current lender.

The assessments allow lenders to approve mortgages for borrowers who can demonstrate an established record of meeting their payments, even when they might not satisfy conventional affordability criteria.

Borrowers moving to new lenders through the assessments also secured larger loans at lower rates, according to data released to Stonebridge following a Freedom of Information request.

The average interest rate on these external remortgages was 3.92% in the first quarter, 0.73 percentage points below the rate on product transfers. The average external loan was £194,999 — 141% larger than the average product transfer loan.

Average loan sizes among borrowers moving to new lenders rose by 5.4% year on year. By contrast, the average product transfer loan fell by 36.8% to £80,749.

Across the wider regulated mortgage market, sales rose by 15% annually in the first quarter. Remortgage advances represented 28.1% of sales, compared with 21.3% a year earlier.

ADVISER INFLUENCE

Rob Clifford, chief executive of Stonebridge, said: “You can see the hand of advisers at play here. They are harnessing the power of MAAs to release customers who felt they were locked in, by helping borrowers jump to better deals with new lenders.

“The use of product transfers dwindles which reflects better consumer outcomes.

“There’s clearly demand for MAAs, the FCA’s logic in giving lenders greater power to make common sense lending decisions is constructive and there’s no doubt they could be even more widely used.

“This isn’t just about mortgage prisoners or those whose income has been more irregular. Plenty of entrepreneurs, for example, struggle to meet underwriting criteria after starting new businesses, despite paying a mortgage for years.

“It’s therefore pleasing to see the direction of travel in terms of lender adoption and brokers awareness.”

Stonebridge said it was the UK’s second-largest mortgage network by number of appointed representative firms and had added more appointed representatives than any comparable network last year for the fourth consecutive year.