First-time buyers, older borrowers and the self-employed could find it easier to get a mortgage if reforms to the mortgage market go ahead.

The Financial Conduct Authority (FCA) has proposed the rule changes so that lenders can help borrowers who have previously struggled to get a mortgage.

It means lenders would be able to consider individual circumstances and develop more flexible mortgage products – and estate agents would benefit from a wider pool of house hunters.

Proposed changes

The changes include reducing barriers for lenders to offer flexible repayments for people with variable income, such as the self-employed, and lend to those paid in foreign currency.

Lenders would also be encouraged to assess affordability based on a person’s full and current situation, rather than automatically exclude people due to minor or past credit history issues.

The changes would also make it easier for older homeowners to unlock wealth built up in their property by updating affordability guidance for retirement interest-only mortgages.

Interest-only mortgages

The rules on interest-only or part interest-only mortgages would be updated to give lenders more flexibility.

For estate and letting agents, the proposals would mean easier mortgage access for different types of borrowers, and so helping to widen the pool of active house hunters.

This is particularly relevant at a time when transaction volumes remain under pressure.

Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.”

David Geale, executive director for payments and digital finance at the FCA, said: “We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow.

“Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.”

Holistic approach

Karen Noye, mortgage expert at Quilter: “Current affordability assessments can be limiting for those looking to get onto the property ladder, and a shift towards a more holistic approach whereby someone’s full current financial situation is considered, rather than historical credit issues immediately closing the door to homeownership, would be a positive step forward.

“However, there will naturally be a delicate balancing act when it comes to widening access. Looser rules around affordability and lending structures, particularly around interest-only offerings or borrowing later in life may help to improve access in the shorter term, but it will be vital that borrowers do not make unsustainable commitments that could impact them further down the line.

“We have already seen a significant increase in people taking mortgages that they well be paying well into their retirement years, and this risks having a knock-on impact on their financial security and quality of life when more of their income is going on housing costs than they might have planned for.”

The FCA is consulting on the proposals, with responses invited from companies, consumers and interested parties until 28th July 2026.