FCA proposes mortgage rule overhaul to widen access

The Financial Conduct Authority has proposed a major overhaul of mortgage lending rules aimed at making it easier for first-time buyers, self-employed workers, and older borrowers to secure home loans. The regulator announced the consultation on Tuesday, June 9, 2026, stating the changes are designed to modernize a market that has not kept pace with contemporary lifestyles and work patterns.

Central to the proposals is a push for lenders to adopt a more individualized approach to assessing affordability. This includes reducing barriers for people with variable incomes, such as the self-employed, by allowing for more flexible repayment structures. The FCA also wants lenders to consider applicants' full and current financial situations rather than automatically excluding them for minor or historic credit issues, and to facilitate lending to those paid in foreign currencies.

A significant component of the plan involves updating rules for interest-only and retirement interest-only mortgages. For smaller loans where the interest-only portion is less than 25% of the property's value, the FCA is proposing to remove the requirement for borrowers to have a pre-approved "credible...