The government has launched a consultation on reforms relating to zero-hours and similar...
The Financial Conduct Authority (FCA) has published proposals for wide-ranging reforms to the UK mortgage market, aimed at improving access to home ownership, supporting later-life borrowing, and strengthening protections for vulnerable consumers.
The proposed changes could significantly affect first-time buyers, self-employed borrowers, homeowners approaching retirement, mortgage brokers and lenders. Public consultation on rule changes is expected to begin in early 2026, with the first reforms anticipated later in the year.
Four Key Areas of Mortgage Reform
The FCA has identified four priority areas for reform.
1. First-Time Buyers and Underserved Consumers
The FCA intends to review and simplify mortgage rules to allow lenders greater flexibility in assessing affordability. This includes:
- recognising non-traditional working patterns, such as self-employment or variable income;
- supporting borrowers whose income fluctuates at different life stages; and
- encouraging mortgage products that better reflect modern employment realities.
The aim is to widen access to mortgages while maintaining responsible lending standards.
2. Later-Life Lending and Housing Wealth
Later-life borrowing is a major focus of the reforms. The FCA plans to:
- review retirement interest-only (RIO) mortgage requirements to improve accessibility;
- explore how advice standards can be enhanced to help borrowers plan confidently for later life; and
- carry out a focused market study on the lifetime mortgage sector.
The study will assess whether the later-life lending market can meet the evolving needs of future consumers and deliver fair-value products.
3. Innovation, Technology and Disclosure
The FCA also aims to modernise mortgage advice and disclosure by:
- encouraging responsible use of data and artificial intelligence (AI) to support faster and more accurate mortgage advice, while retaining appropriate human oversight;
- simplifying advertising and disclosure requirements so consumers can more easily understand mortgage information online; and
- supporting innovation that improves customer experience without weakening consumer protection.
4. Protecting Vulnerable Consumers
Protecting vulnerable borrowers remains a central objective. The FCA plans to work with industry partners to:
- support individuals affected by financial abuse; and
- assist borrowers who use mortgages to manage or consolidate debt, ensuring they are not exposed to unfair risk.
Next Steps and Consultation Timeline
The FCA expects to begin public consultation on proposed rule changes across the four reform areas in early 2026, with initial reforms coming into force later that year.
The terms of reference for the later-life lending market study are expected to be published in the first quarter of 2026.
Q&A: FCA Mortgage Market Reform Explained
Who could benefit from these reforms?
First-time buyers, self-employed individuals, older homeowners, and those with non-standard income patterns may find it easier to access suitable mortgage products.
Will mortgage affordability rules be relaxed?
The FCA is exploring flexibility, not deregulation. Affordability checks will remain, but may better reflect real-world income patterns.
What is a retirement interest-only mortgage?
A RIO mortgage allows borrowers to pay interest only, typically until death or long-term care, when the property is sold.
Why is the lifetime mortgage market being reviewed?
Demand for later-life borrowing is growing, and the FCA wants to ensure products remain fair, transparent and suitable for future generations.
When will changes take effect?
Consultations will begin in early 2026, with the first rule changes expected later that year.