FCA proposes mortgage access reforms for first-time buyers, older borrowers and self-employed

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FCA mortgage access reforms

Highlights

FCA proposes rule changes giving lenders flexibility to design mortgage products for self-employed, foreign currency earners, and variable-income borrowers.
Affordability assessments will now consider a borrower's full, current financial position, and updated guidance will support older homeowners via retirement interest-only mortgages.
The public consultation on these reforms runs through 28 July 2026, aiming to rebalance risk and broaden access while maintaining key borrower protections.

Proposed rule changes and consultation timeline

As reported by the Financial Conduct Authority, the proposed changes give lenders more flexibility to assess individual circumstances and design mortgage products that better reflect how people earn, borrow and repay. The regulator says this includes reducing barriers to flexible repayments for borrowers with variable income, such as the self-employed, and making it easier for lenders to serve people paid in foreign currency.

The plans also encourage firms to judge affordability using a borrower’s full and current financial position, instead of automatically ruling out applicants because of minor or historic credit issues. The FCA is also updating affordability guidance for retirement interest-only mortgages, which could help older homeowners unlock property wealth, and revising rules on interest-only and part interest-only loans so lenders have more room to operate while most borrowers still need a clear repayment plan.

Implications for lenders and UK borrowers

The consultation forms part of the FCA’s broader programme to help consumers manage their financial lives and support economic growth. In December 2025, the regulator set out plans to drive reforms in the mortgage market so it better reflects current consumer needs, and the latest proposals build on that agenda.

The FCA says standards in the mortgage market have risen over time, including through the Consumer Duty, and that the new package seeks to rebalance risk without weakening safeguards. Alongside submissions from firms and other stakeholders, the regulator is using an online tool to gather direct feedback from consumers on their mortgage market experiences, with responses open until 28 July 2026.

Our earlier update on the UK residential mortgage market noted that housing conditions were moving into a more balanced phase, with house price momentum easing and transaction activity normalising after policy-driven distortions. We also highlighted that UK RMBS credit performance was stabilising overall thanks to strong prime collateral and resilient deal structures, even as the gap between prime and nonprime borrower segments remained in focus. The piece added that cooling rental growth and expected regulatory shifts could materially reshape the buy-to-let sector and landlord behaviour.

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