Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

FCA Proposes Flexible Mortgage Rules to Support Diverse Borrowers

The Financial Conduct Authority (FCA) has released its latest Mortgage Rule Review Consultation Paper, CP26/18 ‘Supporting first-time buyers and underserved consumers’, which includes a range of proposals aimed at improving access to mortgage finance for groups who have traditionally faced barriers.

The consultation paper highlights that first-time buyers, self-employed borrowers, those with variable incomes, later life borrowers, and individuals with historical credit issues have often struggled to access mortgage products under existing lending models.

The FCA’s proposals acknowledge that modern working lives and income patterns have changed significantly over the past decade, and that regulation should adapt accordingly. The consultation notes that most poor mortgage outcomes are due to external events such as unemployment, illness, or relationship breakdown, and that while regulatory changes and higher underwriting standards can help protect consumers, not all risk can be eliminated.

The paper also places significant emphasis on the role of Consumer Duty as a safeguard to ensure that increased flexibility in lending does not compromise consumer protection. The FCA suggests that lenders could be given greater flexibility in assessing affordability, considering future repayment strategies, dealing with historical adverse credit, and serving borrowers with non-traditional income patterns.

For letting agents and inventory clerks, these proposed changes could mean a broader range of tenants and buyers entering the market, particularly from groups who have previously found it difficult to secure mortgage finance. The consultation also implies a continued and possibly increased role for professional mortgage advisers in helping consumers navigate a more complex and flexible mortgage landscape.