The FCA is seeking a public conversation on the future of the mortgage market as part of its work to help consumers navigate their financial lives and to support economic growth.  

Areas include:

• Potential to update responsible lending rules to support wider access to sustainable home ownership.  
• Ensuring the regulatory framework and the market are prepared for the likely future increases in demand for later life lending.  
• Introducing more flexibility to promote consumer understanding, information needs, and innovation.  
• Rebalancing the collective risk appetite in mortgage lending.  

David Geale, executive director for Payments and Digital Finance, said: “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 considerably over recent years. First time buyers are older and borrowing for longer, including into later life. The FCA’s data shows that in 2024, 68% of first-time buyers borrowed for terms of 30 years or longer. Homeowners will also increasingly need to access their housing wealth to provide for their needs during retirement.

Home ownership has 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. The FCA’s Financial Lives 2024 survey shows those who are renting are more likely to display characteristics of vulnerability and to be in poor health compared with other UK adults.

The mortgage market is resilient. Over recent years the FCA has seen improvements in mortgage lenders’ conduct standards and default rates have remained historically low.

This work to reform mortgage rules was included in the FCA’s new strategy, which commits the regulator to helping consumers navigate their financial lives and help growth. The measures were also included in a letter to the Prime Minister, which detailed changes to support economic growth.

As part of this work, the FCA has talked to firms about the flexibility already available when checking if someone can afford a mortgage. This has helped more borrowers access mortgages.

There are many factors at play when thinking about the future of the mortgage market. Housing supply, social policy and wider economic conditions all impact affordable home ownership. The FCA highlights that any changes to its rules are only one part of the story. They will work with others to support access to home ownership to create an effective mortgage market where more borrowers who can afford to repay can access the mortgages they need.

Feedback on the discussion paper will close on 19 September. Before recommending any changes to its rules, the FCA will focus on how consumers and the market are protected.