The mortgage industry has until tomorrow to respond to Financial Conduct Authority proposals intended to widen access for first-time buyers, self-employed workers and older borrowers.
The regulator’s CP26/18 Mortgage Rule Review consultation closes on 28 July, with final rules expected during the second half of 2026.
Proposed changes would give lenders greater flexibility when assessing applicants with variable or irregular earnings and reduce barriers to flexible repayment arrangements for self-employed borrowers.
The FCA is also considering changes covering foreign currency income, interest-only and part-and-part mortgages, retirement interest-only lending and applicants with previous credit problems.
BIGGER PICTURE
The regulator wants lenders to take a fuller view of applicants’ current financial circumstances rather than automatically excluding them because of minor or historic credit issues.
Responsible lending requirements would remain in place, with lenders continuing to assess whether customers could afford their mortgages.
Financial wellbeing and credit-building platform Loqbox welcomed the direction of the reforms but warned that changing assessments at the application stage would address only part of the problem.
Tom Eyre, chief executive officer and co-founder of Loqbox, said: “The FCA is right to widen access to mortgages.
“Proposing to judge people on their current circumstances, rather than allowing minor or historic credit issues to become a lasting barrier, is a genuine step forward. However, changing the rules at the point of assessment only solves part of the problem.
“Even the best assessment can only judge what’s in front of it. One of the quiet failures of our system is that we ask people to make the single biggest financial commitment of their lives with almost no prior preparation. Many do the ‘sensible’ thing and avoid credit altogether, only to discover that a thin or non-existent history can be just as much of a barrier as a poor one.”
“The FCA has made the door easier to open.”
He added: “Easier access has to be matched by earlier, clearer help to get people genuinely mortgage-ready: treating it as a gradual process built over years, not a last-minute hurdle at the point of purchase. Without that, we risk simply swapping rejection now for over-stretch later.
“The FCA has made the door easier to open, recognising the huge ‘pre-prime’ group who are doing the right things but haven’t yet been able to prove it on paper. The job now is making sure people arrive ready to walk through it.”
