TL;DR
The FCA has published a blog post setting out its vision for mortgage market reform, framing the changes as focused on better outcomes for borrowers rather than simply relaxing rules. The regulator emphasises that lenders must continue to lend responsibly but that the current framework may prevent some creditworthy borrowers from accessing appropriate mortgages.
Last reviewed: June 2026 | Sources: FCA
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Mortgages FCA: Opening the Door to Mortgages FCA position: rules should deliver better outcomesFocus: creditworthy borrowers currently excludedNot a rollback: responsible lending requirements remainConsultation: open — responses welcomedRegulator: FCA |
The FCA's stated position
The FCA's blog post, authored by the regulator's mortgage team, frames the proposed mortgage rule changes as being about delivering better outcomes for consumers rather than simply relaxing responsible lending standards. The FCA acknowledges the tension between protecting consumers from unaffordable debt and ensuring that creditworthy borrowers can access mortgages appropriate to their circumstances.
The regulator makes clear that any changes will maintain the fundamental principle that lenders must assess affordability and lend responsibly. The question being examined is whether the current prescriptive methodology is the best way to achieve this, or whether giving lenders more flexibility in evidence-gathering would produce better outcomes without increasing risk.
Who the FCA identifies as being blocked by current rules
The FCA's blog specifically identifies three groups who may be disproportionately affected by current affordability rules. First-time buyers who demonstrate the ability to meet mortgage payments through consistent rental payment histories but fail stress tests. Self-employed borrowers whose averaged income figures understate their sustainable earning capacity. And older borrowers approaching retirement whose remaining income-generating years are shorter than standard mortgage terms assume.
For each of these groups, the FCA suggests that a broader evidence base could allow lenders to make more accurate assessments of creditworthiness without increasing the risk of irresponsible lending.
What the FCA means by better outcomes
The FCA defines better outcomes in the mortgage market as: more people in appropriate homeownership, fewer people in insecure rental arrangements when they could sustainably own, and a mortgage market that distinguishes between different types of borrower risk rather than applying uniform rules. The blog frames the current rules as appropriate for the post-2008 environment but potentially over-calibrated for current market conditions.
The consumer duty connection
The FCA links the mortgage reform proposals to its Consumer Duty, which requires firms to deliver good outcomes for customers. The regulator suggests that declining creditworthy borrowers who could sustainably afford homeownership may itself be a poor consumer outcome under the Duty framework, shifting the lens from individual transaction risk to broader customer outcome.
What this means in practice
For borrowers, the FCA blog confirms that the regulator is actively consulting on mortgage rule changes with a view to reform. While the changes are not yet in force, the direction of travel is clear. Borrowers who have been declined should engage a whole-of-market broker to explore options within existing rules while the consultation progresses.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
What is the Consumer Duty and how does it relate to mortgages?
The FCA's Consumer Duty, which came into force in July 2023, requires firms to act to deliver good outcomes for retail customers across four areas: products and services, price and value, consumer understanding, and consumer support. The FCA is now examining whether current mortgage rules deliver good outcomes under this framework.
Does the FCA blog represent a confirmed policy change?
No. The blog sets out the FCA's thinking and frames its consultation. A blog post is not a policy statement or final rule. Changes to mortgage rules require a formal consultation process with industry and consumer responses before any final rules are made.
How can I respond to the FCA consultation?
Consultation responses can be submitted through the FCA's website at fca.org.uk. The FCA welcomes responses from consumers, lenders, brokers and other interested parties. The consultation paper sets out the specific questions the FCA is seeking views on.
What is the Mortgage Market Review and why did it introduce the current rules?
The Mortgage Market Review was an FCA investigation into the mortgage market following the 2008 financial crisis. It identified irresponsible lending as a contributor to mortgage arrears and repossessions. The resulting rules, introduced in 2014, required lenders to verify income, assess affordability and apply stress tests to prevent borrowers taking on unaffordable debt.
Are there lenders who are already more flexible within current rules?
Yes. While all lenders must comply with FCA affordability rules, there is significant variation in how individual lenders implement the requirements. Some specialist and building society lenders apply more nuanced underwriting for self-employed borrowers and first-time buyers. A whole-of-market broker can identify which lenders are most likely to approve a specific application.
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Sources FCA Blog: Opening the Door to Mortgages |
