Credit markets have always had to accommodate change, but there are periods when the assumptions on which they have been built begin to move more quickly than the rules and processes designed to oversee them. We may be in one of those periods now.
The idea of a typical mortgage customer is becoming less useful when people are working for longer, employment patterns are changing, incomes are derived from more varied sources and mortgages themselves increasingly extend into what would once have been considered retirement years.
None of this makes those customers inherently less suitable for credit, but it does make understanding affordability, resilience and future circumstances more complicated.
The FCA’s proposed changes to mortgage rules recognise some of this, particularly in relation to older customers, variable incomes and previous credit difficulties, but the wider point is perhaps more important.
Responsible lending cannot mean applying an increasingly narrow definition of what a good customer looks like simply because that definition is familiar.
Recent refinancing behaviour provides another illustration. In the first half of 2026, 880,635 mortgages were locked into new deals up to six months before maturity, while around 354,000 mortgages have benefited from temporary interest only arrangements or term extensions since the Mortgage Charter was introduced.
It would be wrong to interpret all of this as evidence of financial difficulty. What it does show is how customers and lenders respond when rates, household finances and expectations change. Flexibility has become an increasingly important part of the market.
For lenders, their funders and ultimately investors, this presents a rather different risk question. It is no longer enough to ask whether a credit policy that worked historically is still being followed.
We also need to ask whether that policy, and the assumptions behind it, remain appropriate for the market developing in front of us.
There has long been a tendency to think about audit, credit review and independent oversight as defensive functions, with growth happening in one part of an organisation and risk being controlled somewhere else. In reality, the two should be much more closely connected.
A business can only extend its appetite with confidence if it can see clearly what that decision is doing to the quality and composition of its portfolio.
That requires more than checking whether individual cases have complied with policy. A series of perfectly explicable individual decisions can still produce an unexpected outcome when viewed together.
Small changes in exceptions, affordability, customer characteristics, repayment behaviour or concentrations can gradually alter the nature of a portfolio without any single decision appearing particularly significant.
The FCA’s recent thinking about the future of credit is relevant here because it increasingly talks about regulation in terms of outcomes rather than prescription, giving firms greater room to respond to changing customer needs while remaining accountable for the results.
That freedom inevitably places greater importance on the quality of information, oversight and judgement within firms themselves.
The amount and timeliness of data now available means that review need not simply be an exercise in looking backwards. It should increasingly help organisations understand where their portfolios are moving, where assumptions are beginning to be tested and where apparently unconnected changes may deserve closer attention.
More information is only valuable when somebody understands its significance, challenges what it appears to show and considers it in the context of the wider credit environment. The opportunity is to give experienced people a better view of risk while there is still time to respond to it. History suggests this matters. Credit problems rarely arrive completely unannounced.
More commonly, risk builds incrementally, with individual warning signs appearing manageable until they are considered collectively or viewed with hindsight. The challenge is to shorten that hindsight.
There will always be a tension between extending credit and controlling risk, and that is healthy. But safe growth cannot mean avoiding change, particularly when customers themselves have already changed.
It should mean having sufficient visibility and independent challenge to move with the market without losing sight of where risk is moving with it.
In that sense, scrutiny is not the opposite of growth. It is part of the infrastructure that makes sustainable growth possible.
