FCA outlines plans to improve access to home loans
The Financial Conduct Authority (FCA) is encouraging lenders to make greater use of flexibility within existing mortgage regulations, particularly around interest rate stress testing. The move aims to improve access to home loans and support the UK economy.
The initiative, originally announced in January, follows concerns that stress testing requirements may be preventing creditworthy borrowers from securing mortgages, despite recent signs of declining interest rates. The FCA is now calling on lenders to apply the flexibility already built into the rules, which could lead to changes in how mortgage applications are assessed.
In the coming weeks, the regulator will launch a call for evidence on stress testing, seeking industry input on whether current models accurately reflect affordability. The review could open the door for adjustments that better align lending criteria with economic conditions.
We’re taking swift action to support people in getting the keys to their own home.
— Financial Conduct Authority (@TheFCA) March 7, 2025
Read more on our work to support home ownership and the wider UK economy https://t.co/A4RXHWsskP#FinancialRegulation #FinancialServices #Mortgages #EconomicGrowth
Further regulatory changes are expected in May when the FCA begins a consultation on simplifying mortgage rules. Proposals include making it easier for borrowers to remortgage with a new lender, allowing some to explore options outside the regulated advice process, and streamlining the process of reducing a mortgage term. These changes could provide borrowers with greater flexibility and offer brokers more tools to assist clients.
A broader discussion on the future of the mortgage market is scheduled for June. This will examine the industry’s role in supporting homeownership at different life stages, regulatory impacts, and the mortgage sector’s contribution to economic growth.
“We are taking swift action to support people in getting the keys to their own home,” said Nikhil Rathi (pictured), chief executive of the Financial Conduct Authority. “Firms have the flexibility to help more people become homeowners and we want them to use it.
“There is more to be done, and we will be delivering further proposals quickly to support home ownership and the wider UK economy.”
Chancellor Rachel Reeves welcomed the regulator’s move, saying it would “kickstart economic growth and help working families get on the housing ladder.”
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