First-time buyers will get more help getting onto the property ladder thanks to new plans unveiled by the financial watchdog this week.
The Financial Conduct Authority (FCA) said mortgage market reforms would also help homeowners free up their home equity so they can plan for later life.
David Geale, executive director for payments and digital finance at the FCA, said: “Reforming the mortgage market can help tackle the fact that as a society we are saving too little for later life, while people have vast wealth tied up in property.”
Under the plans, the FCA said it would focus on four main areas:
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New buyers and underserved consumers
The regulator said it wanted to simplify mortgage rules to allow for more flexible products that reflected different working patterns and income levels at different stages of life.
This means that self-employed people or people with more complex incomes can take out a mortgage more easily.
Holly Andrews, Loan Manager and Director at KIS Financesaid: “Since the credit crisis, being able to obtain financing secured by your home has been highly dependent on being able to comfortably afford the monthly repayments.
“Proving that a borrower has sufficient income is a complex financial hurdle that usually involves difficult income verification and detailed documentation.
“The new changes aim to make this easier and take into account the wide range of modern pay methods and the way people are paid overtime, meaning more people will qualify for products such as a first mortgage. This will in turn benefit housing and the UK economy.”
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Loans later in life
The FCA also said it would review pension interest only needs to make it more accessible and explore ways to improve advice to help people plan for later life with confidence.
David Burrowes, chairman of the Equity Release Council, said this recognition that home equity would play an increasingly important role in financial wellbeing in later life was both “timely and necessary”.
“For many older homeowners,” he continued, “later-life lending is no longer a niche option, but a practical and responsible way to support retirement income, manage debt or live in their own home longer.”
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Innovation and disclosure
As part of the reforms, the FCA wants to encourage the use of data and technology, such as AI, to help mortgage brokers provide better and faster advice while retaining the human touch. They will also look at ways to help consumers understand information online more easily.
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Protection of vulnerable consumers
Finally, the FCA will work with partners to support people affected by financial abuse and help people using mortgages manage or consolidate their debts.
The FCA will start public consultation on these changes in early 2026 and will aim to implement the first rule changes later that year.
It is also launching a study to see how the senior lending market could evolve to meet the different needs of future consumers. The aim is to support market development so that consumers have access to fair products that meet their needs.
The announcement comes in the year that mortgage lenders relaxed stress tests, a move that has boosted lending to customers.
But even with these measures in place to support more first-time buyers, there are concerns that more needs to be done to improve homeownership rates.
Zara Bray, mortgage distribution director at Quilter Financial Planning, said: “The FCA’s roadmap is ambitious and welcome, but can only work in parallel with a government committed to overcoming Britain’s entrenched housing problems.
“Even with more flexible lending approaches, limited housing supply will remain a major drag on homeownership. Without sustained action on the supply side, the benefits of regulatory innovation will be limited, especially for first-time buyers who face intense competition for too few homes.”