Another step has been taken to relax mortgage rules in a bid to boost homeownership and make it easier for people to buy their own home.
First-time buyers (FTBs), the self-employed and people borrowing in retirement are amongst those to benefit from the Financial Conduct Authority (FCA’s) mortgage rule review, which is now open for discussion.
The regulator has asked for feedback on proposals to update responsible lending rules help make mortgages more accessible and make it easier for more people to buy their own home.
But it also wants to look at how mortgages can be managed more effectively into retirement. The FCA said first-time buyers are now older and borrowing for longer, including into later life. Its data showed, in 2024, 68% of first-time buyers borrowed for terms of 30 years or longer.
And it has recognised homeowners will also increasingly need to access their housing wealth to provide for their needs during retirement and it wants to hear feedback on how this can be achieved.
David Geale, executive director for payments and digital finance, at the FCA, said: “We want to evolve our mortgage rules to help more people access sustainable home ownership.”
He added: “Changing our mortgage rules could make it easier for people to get onto the property ladder and manage mortgages into retirement.
“We can’t solve all the issues related to home ownership. But we’re playing our part in helping people better use the mortgage market to navigate their financial lives and to encourage a dynamic, innovative and competitive market.”
Balancing act
Whilst the FCA wants to take down the hurdles many people face when attempting to buy their own home with a mortgage, it will also be conscious these rules were into place for a good reason.
Following the financial crisis in 2008 restrictions on mortgages became tighter. However, it is now widely accepted that these are not serving consumers and this is having a negative impact on the housing market.
The FCA said home ownership had become an increasingly challenging aspiration for many, with more people renting for longer periods of time. Those that do rent, face higher housing costs and less security.
Paul Broadhead, head of mortgage and housing policy at the Building Societies Association (BSA) said its members would be contributing to the review. He added: “Since the financial crisis, it is clear that the regulatory pendulum has swung too far towards caution, prioritising detailed rules at the expense of access to the benefits of homeownership for many creditworthy families.”
He said there were both risks and opportunities in mortgage regulation and, in reviewing this, it was important to maintain the trust consumers have in the mortgage market whilst also being radical and ambitious to support more people on their homeownership journey.
“We must be mindful of the way people live today and ensure that all proposals are future-proofed,” he said. “Wide ranging reviews of the mortgage market are rare so this is potentially a once in a generation opportunity. The outcome of both this review and a supply-side plan from Government must together create an environment where homes are more affordable, more available and more appropriate to the needs of those who will live in them.”
