The Financial Conduct Authority (FCA) has announced that it will consult on changes to the mortgage market, including simplifying mortgage rules to allow more flexible products that better reflect different working patterns and income levels at various stages of life.
The FCA is aiming to improve advice to help people “confidently plan for later life”, while encouraging the use of AI to help brokers provide “better and faster advice”.’
The FCA will focus on four areas:
+ First-time buyers & underserved consumers: Simplifying mortgage rules to allow more flexible products that reflect different working patterns and income levels at different stages of life.
+ Later-life lending: Reviewing retirement interest-only requirements to make them more accessible. Exploring ways to improve advice to help people confidently plan for later life. Conducting a focused market study to ensure the lifetime mortgage market can meet the changing needs of future customers.
+ Innovation & disclosure: Encouraging the use of data and technology, such as AI, to help brokers give better and faster advice while keeping a human touch. Looking at ways to make advertising and disclosure rules simpler, so consumers can understand information online more easily.
+ Protecting vulnerable consumers: Working with partners to support people affected by financial abuse and help those using a mortgage to manage or consolidate debt.
David Geale, executive director for payments and digital finance at the FCA, said: “We have worked at pace this year to improve outcomes for customers wanting a mortgage. We’ll use insight from consumers and industry to drive further reforms and rebalance risk – helping to widen access to affordable mortgages to meet the needs of consumers today.
“Reforming the mortgage market can help address the fact that as a society we’re saving too little for later life, yet people have huge wealth tied up in property.”
The FCA will start to consult the public on proposed rule changes in the four areas from early 2026 and aim to have the first rule changes in place later that year.
The FCA will also launch a focused market study to consider how the later life lending market could develop to meet the different needs of future consumers.
David Burrowes, chair of the Equity Release Council, remarked: “The FCA’s acknowledgement that housing wealth will play an increasingly important role in later life financial wellbeing is both timely and necessary. For many older homeowners, later life lending is no longer a niche option, but a practical and responsible way to support retirement income, manage debt, or remain in their own homes for longer.”
“The FCA’s roadmap highlights demographic change, longer mortgage terms and pension under-saving as structural challenges facing the UK, and signals further work to ensure the later life lending market is ready to meet growing demand.
Burrowes added: “We strongly welcome the FCA’s commitment to a focused market study on later life lending. This presents an opportunity to ensure the market continues to evolve in a way that delivers good outcomes, fair value and consumer confidence, while supporting innovation and choice.”
Justus Brown, CEO and founder of ACRE, described the FCA’s proposed mortgage reform as a welcome step in the right direction.
He said: “Efforts to apply more innovative approaches, including the use of data and technology, will improve affordability, helping first-time buyers and those with less conventional incomes to get a fairer chance at home ownership.
“While it’s a step in the right direction for affordability, the other side of the equation must not be ignored.
“The UK needs more homes, and more homes for rent. Allowing people to borrow more than they can truly afford isn’t the answer; ensuring there are enough homes they can afford is.
“We hope that the FCA continues to take into account the vital human touchpoints in underwriting and encourages a hybrid human-technology model for financial services. It’s human decision making that allows lenders to support getting many more people onto the housing ladder who might otherwise be excluded by automated decision-making.
“Delegating to an AI, no matter how smart, is just replacing one set of automated decision making with another, but with less accountability as AI is essentially a “black box”.
Mary-Lou Press, president of NAEA Propertymark, described the FCA’s move as a welcome recognition that the mortgage market must better reflect modern working lives and changing borrower needs.
Press commented: “Greater flexibility for first-time buyers, the self-employed, and those with non-traditional or later-life income has the potential to unlock home ownership for groups who have historically been underserved.
“Moves to simplify rules, modernise affordability assessments and responsibly embrace innovation such as rental payment data and AI-driven advice could make a meaningful difference, provided robust consumer protections remain in place. The fact that the vast majority of mortgages remain out of arrears shows the current system is fundamentally sound, but also that there is room to carefully widen access without increasing risk.
“As affordability pressures ease and lenders adapt following changes to stress testing, reforms should be introduced in a measured way, alongside clear advice and transparency. Ensuring consumers fully understand their options, particularly around interest-only, part-repayment and later life lending, will be key to supporting sustainable home ownership both now and in the future.”
