Mortgage Rules to Be Eased for First Time Buyers and Self Employed in Major FCA Shake Up

First-time buyers, self-employed workers and older borrowers are expected to find it easier to access the property market as the Financial Conduct Authority outlines a significant overhaul of mortgage rules. The UK regulator has revealed plans to simplify regulations, giving lenders more flexibility to offer products better suited to varying income patterns and stages of life. These reforms are intended to provide greater access to affordable mortgages for those historically underserved by the market.

The proposals include a review of requirements for interest-only mortgages, with a particular focus on making them accessible for older buyers. In addition, the FCA has announced a targeted market study to assess whether the lifetime mortgage sector can adapt to the evolving needs of future homeowners. The regulator encourages the integration of advanced data analysis and artificial intelligence to support mortgage brokers, with the aim of improving the quality and speed of advice while retaining essential human judgement.

Efforts are also underway to streamline rules governing mortgage advertising and disclosure, enabling clearer and more comprehensible online information for potential borrowers. David Geale, the FCA’s executive director for payments and digital finance, stated the authority’s aim is to broaden access to affordable credit, reflecting the needs of contemporary consumers. A public consultation on these proposals will launch early next year, with initial rule changes targeted for later in the same year.

The reforms follow government pressure for regulators to stimulate economic growth. Earlier this year, the FCA relaxed guidelines related to interest rate stress tests, providing lenders with more discretion and resulting in wider borrowing options. It is estimated that many borrowers now qualify for approximately £30,000 more than before this intervention. Despite an environment of higher rates and rising living costs, 99 percent of mortgages agreed since 2014 remain out of arrears, and the number of first-time buyers has proven resilient against increasing house prices.

Additional measures under consideration include support for those with irregular incomes, notably the self-employed, and for individuals rebuilding their credit. The FCA also aims to enable older homeowners to unlock property wealth, recognising that significant assets are often tied up in housing at the expense of later life financial security. Specialised interest-only mortgages designed for retirees are proposed as a solution to improve financial flexibility.

As the FCA works towards building a future-proofed mortgage market responsive to technological, economic, and demographic shifts, it continues to examine ways in which substantial housing wealth can be utilised to support the financial needs of the population across all life stages. These reforms signal an intent to bring lasting change to mortgage accessibility and affordability in the United Kingdom.