Concerns over mortgage affordability and access to home ownership remain front and centre despite new remortgaging and term change reforms from the Financial Conduct Authority (FCA) coming into immediate effect.
The new rules – announced as part of the FCA’s wider review of mortgage regulation – are designed to make it easier for borrowers to switch to cheaper deals and reduce their mortgage terms. Under the changes, borrowers will:
- find it easier to reduce their mortgage term, potentially lowering the total cost of borrowing and the risk of repayment extending into retirement;
- more easily remortgage with a new lender, improving access to cheaper products;
- be able to discuss options with their mortgage provider and receive advice when needed.
Lenders are expected to continue offering regulated mortgage advice and to identify consumers who may need extra support. The FCA has also removed some previous guidance to reduce regulatory burden, aiming to give lenders and brokers greater flexibility to innovate and compete.
Industry reaction has focused on whether the reforms will shift the dial on long-standing affordability pressures in the property market. Karen Noye, mortgage expert at Quilter, said: “It is clear that mortgage affordability is moving up the agenda for the FCA and the government, with the Treasury recently announcing that the mortgage guarantee scheme will be made permanent.
“While the changes announced will help to make things simpler for those able to access cheaper mortgage deals, it does not reduce the impact of tough affordability criteria on those looking to take their first steps onto the property ladder or those who have a higher loan to value on their property.
“While lenders had been trimming rates in anticipation of further base rate cuts, the higher-than-expected CPI figure released this month may delay that trajectory. For buyers, this means affordability remains a key constraint – regardless of these changes – particularly for those relying on fixed-rate deals to manage stretched budgets.”
Noye also pointed to the risks for borrowers seeking to shorten their mortgage terms, noting that while doing so can help avoid repayments into retirement, it will generally mean higher monthly payments.
Matt Harrison, customer success director at Finova Broker, said simplifying the rules should reduce barriers for both borrowers and advisers. He noted: “These reforms open the door for firms to rethink how they deliver advice and value – technology will be the backbone of making that happen.”
The FCA said these reforms are voluntary for lenders but are intended to support sustainable home ownership, broaden access, and drive competition.
