The Intermediary Mortgage Lenders Association has welcomed a move towards greater regulatory flexibility in the UK mortgage market but warned the Financial Conduct Authority that any reforms must preserve consumer protections and the central role of professional advice.
In its response to the FCA’s discussion paper on the future of the market (DP25/2), the trade body also pressed ministers to confront what it calls the biggest brake on first-time homeownership – the shortage of suitable, affordable homes.
IMLA argues that advice-led journeys should remain the default, noting that about 90% of mortgages are arranged through intermediaries. Any simplification of rules, it says, must not dilute access to impartial, professional guidance, which allows borrowers to compare options confidently and avoid foreseeable harm.
ADVICE FIRST, SUPPLY NEXT
The association cautions that tweaks to affordability rules alone will not unlock high volumes of first-time buyer activity. A meaningful rise in new entrants, it says, depends on a sustained increase in the supply of appropriate homes, especially starter properties.
Without this, even a looser framework on affordability will struggle to move the dial for would-be owner-occupiers.
NO PUSH FOR LONG-TERM FIXES
IMLA opposes any attempt by the regulator to steer borrowers towards long-term fixed-rate mortgages. Such products, it argues, tend to rely on funding structures uncommon in the UK, can be more expensive and less flexible, and have historically attracted little consumer interest – a point long recognised in the David Miles review.
If meaningful demand existed, the market would already have scaled competitive solutions, the trade body says.
TARGETED AFFORDABILITY REFORM
Instead, IMLA backs pragmatic reforms to affordability assessments. It favours updates to stress-testing that give lenders discretion over the buffers they apply, rather than tying the market to a single central stress rate.
The use of rent-payment histories can play a sensible part in the overall assessment, it adds, but should never become a sole determinant of creditworthiness.
LTI AND FIRST-TIME BUYERS
The body welcomes the recent easing in the application of the loan-to-income flow limit, which had rationed higher-LTI lending to credit-worthy first-time buyers. Any further recalibration, it says, should be grounded in robust risk evidence and left to individual lenders’ judgment and risk appetite.
LATER LIFE, SHARED OWNERSHIP AND EPC
On later-life borrowing, IMLA sees no need for new rules. The market will, it believes, develop the products consumers require; the critical factor is timely access to a qualified adviser who can assess needs and, where appropriate, refer borrowers to a specialist via clear, industry-led pathways.
The association also argues that barriers to Shared Ownership volumes lie chiefly in scheme administration and documentation – including housing association processes – rather than in FCA rules. Regulatory intervention here is unlikely to be decisive.
On energy performance, IMLA insists that any policy must treat all tenures fairly and rejects the idea that lenders should carry responsibility for the EPC status of mortgaged properties.
AI SHOULD ASSIST, NOT REPLACE
While supporting innovation that uses artificial intelligence to reduce paperwork and streamline processes, IMLA is clear that AI should assist – not replace – qualified advice.
Given that technology tends to evolve faster than regulation, the FCA’s role should be to monitor real-world usage and safeguard consumers rather than pre-empt the market with prescriptive rules.
‘ENHANCED’ ADVICE NOT NEEDED
The trade body also questions the notion of introducing an additional level of ‘enhanced’ advice for certain customer groups, warning that such an overlay risks over-engineering the process and adding complexity without improving outcomes.
Kate Davies, executive director, IMLA, said: “We cautiously welcome proportionate, evidence-led steps that could help more people into homeownership where they genuinely improve outcomes. But professional mortgage advice is non-negotiable.
“Intermediaries are central to helping consumers navigate choice, risk and affordability. The UK mortgage market is broadly working well for a wide range of customers and does not need root-and-branch reform.
“Any changes should be measured, carefully staged and developed in close consultation with industry so we widen access without undermining standards.”
