Mortgage Changes in the Pipeline

When we think of mortgages, we tend to consider the big issues like whether interest rates are changing, how much deposit you need to secure the best loan, or how many people are in difficulties with arrears.

These are, of course, important barometers, but for many people, there’s a more fundamental problem. They just can’t get a mortgage, or at least not one at a reasonable cost that they can afford.

But a new proposal aims to help those currently finding it hard to borrow.

Who finds it tough to get a mortgage?

I’m thinking of three groups of people here.

There’s the first-time buyer who may have only a limited employment history and hasn’t had time to create a reliable credit history. Or has perhaps had one bad credit experience and is now denied loans as a result.

Then there’s the self-employed working possibly in a range of short-term jobs, but even if they’re highly successful and well paid, they lack the guaranteed income month to month that banks and building societies like to see.

And then there’s the older buyer. This person may have plenty of equity tied up in an existing property, but they are wary (or just plain confused) of whether they can take out a mortgage in later life. Whether that’s to allow them to stay in their existing property or to allow them to downsize.

The mortgage market has looked pretty hostile to these groups in recent years, but now the industry’s watchdog, the Financial Conduct Authority (FCA), has come up with new proposals. They may just make it far easier for people in these groups to get on the housing ladder, or to move up and down a few rungs if they wish.

What are the changes?

I think two words sum up the authority’s proposals: flexibility and discretion.

Specifically, the FCA is talking about encouraging lenders to offer more flexible repayment routes, especially for people with variable incomes.

And the authority wants less reliance on algorithms which automatically strike out applications from those with a credit history hiccup years ago. Instead, lenders can use their discretion based on an applicant’s current credit standing.

The FCA also wants clearer guidance on how older buyers can access mortgages, with some relaxations on age restrictions and new options for interest-only mortgages. So long as there’s a clear plan on how the loan is repaid.

Another way of summing all this up is the FCA trying to maintain responsible protection to stop people borrowing more than they can afford, while balancing that against ‘how we live now” with more informal working and much longer lives.

These groups are key to the housing market

Regular readers will know how keen I am to encourage more first-time buyers.

Getting on the property ladder is one of life’s milestones, gets people out of the parental home or the expensive private rental sector, and allows them to buy the homes of past first timers who want larger properties for family or work reasons.

It’s a rather odd analogy, but I regard first-time buyers as the oil that lubricates the housing market!

Meanwhile, the self-employed are growing in number, 4.2m in 2026 compared with 3.0m in 2020, according to government figures. So, making it more difficult than necessary for them to buy a home makes little sense.

And as we live longer (the average UK age expectancy now is 82.2 years against 77.7 back in the year 2000), there’s a need to make it easier for people to move from larger houses to smaller ones. This helps free up the bigger property for families, and gets older people into homes they can better manage with fewer worries.

The timescale

The Financial Conduct Authority proposals are now out for consultation until the end of July, but once everyone has had their say, expect action within a matter of months. We’ll be hearing more about these proposals well before the end of 2026.

In recent years, the FCA has allowed banks to relax stress testing (the rules that assess borrowers’ ability to pay if interest rates rise), and banks have also been allowed to offer larger loans, with safeguards to avoid people over-committing.

So, this latest set of changes fits a pattern of trying to make home ownership more accessible to the widest range of potential buyers.

I would say this, wouldn’t I, but home ownership is a genuinely good thing: it roots people in communities and improves our psychological and financial well-being.

If the FCA is helping with that, I say more power to their elbow!

Last Updated: June 24th, 2026