FCA Launches Public Debate on the Future of UK Mortgages
The Financial Conduct Authority (FCA) is inviting the public to join a conversation on the future of the UK mortgage market, aiming to help consumers manage their finances and support economic growth.
Key areas under review include:
- Updating responsible lending rules to make sustainable home ownership more accessible.
- Ensuring the regulatory framework and market are ready for expected increases in demand for later life lending.
- Introducing greater flexibility to improve consumer understanding, meet information needs, and encourage innovation.
- Rebalancing the overall risk appetite in mortgage lending.
David Geale, the FCA’s executive director for payments and digital finance, stated:
“We want to evolve our mortgage rules to help more people access sustainable home ownership. Having achieved higher standards in the market, now is the time to consider allowing more flexibility in a trusted market. 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.”
The mortgage market has changed significantly in recent years:
- First-time buyers are now older and borrowing over longer periods, often into later life.
- In 2024, FCA data shows 68% of first-time buyers took out mortgages with terms of 30 years or more.
- More homeowners now need to use their housing wealth to meet needs in retirement.
Home ownership has become harder to achieve for many, leading to longer periods of renting. Renters face higher housing costs and less security. According to the FCA’s Financial Lives 2024 survey, renters are more likely to show signs of vulnerability and poor health compared to other UK adults.
The mortgage market remains resilient, with improved conduct standards among lenders and historically low default rates.
These reforms are part of the FCA’s strategy to help consumers navigate their financial lives and support economic growth. The measures were also highlighted in a letter to the Prime Minister, outlining changes to boost growth.
The FCA has discussed with firms the flexibility already available when assessing mortgage affordability, which has helped more people access mortgages.
The FCA acknowledges that many factors affect the future of the mortgage market, including housing supply, social policy, and the wider economy. The FCA stresses that changes to its rules are just one part of the solution and will work with others to improve access to home ownership and ensure an effective mortgage market for borrowers who can afford to repay.
Feedback on the discussion paper is open until 19 September 2025. Before recommending any rule changes, the FCA will prioritise consumer and market protection.
What’s your View ? Email Us at info@principals.biz