The Financial Conduct Authority (FCA) has announced five new mortgage rules that could make it easier for millions of UK customers to secure a home loan. The proposals, open for feedback until July 28, aim to help first-time buyers, freelancers, and older borrowers who have struggled under current regulations.
Key Changes Proposed by the FCA
The FCA's proposals include making it easier for lenders to offer flexible repayment plans for people with variable incomes, such as freelancers and the self-employed. Additionally, lenders will be encouraged to assess affordability based on a borrower's full current situation rather than automatically rejecting them due to minor or past credit issues. Other changes involve updated rules for retirement interest-only mortgages and greater flexibility for interest-only or part interest-only mortgages. The FCA also plans to make it easier to lend to people paid in foreign currency.
Industry Reaction
David Geale, executive director for payments and digital finance at the FCA, said: "We're living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow." Sarah Coles, head of personal finance at AJ Bell, welcomed the changes for self-employed workers, noting that current rules force them to make fixed monthly payments despite irregular incomes. Karina Hutchins, director of mortgages at UK Finance, added that the proposals support the government's pro-growth agenda by removing barriers to finance and helping more people onto the property ladder.
How the Changes Will Affect Borrowers
The new rules are designed to modernise the mortgage market, which the FCA says has not kept up with modern lifestyles. By giving lenders more flexibility, the changes could open up borrowing to groups that have been underserved. The consultation period runs until July 28, after which the FCA will finalise the rules.
