FCA consults on changes to widen mortgage access as part of "Mortgage Rules Review"

On 9 June, the FCA published a consultation paper (CP 26/18) on Supporting first-time buyers and underserved consumers.  This is part of the Mortgage Rules Review, the FCA setting out in its December 2025 feedback statement that this would be one of its key focus areas (the other areas on which we can expect more from the FCA this year being:  enhancing later life lending; enabling innovation; and protecting vulnerable consumers).  

In an environment where homeownership is becoming an increasingly challenging aspiration for many, in this consultation the FCA proposes changes which in its view will give more people, including those with variable incomes, older borrowers, and those with past credit difficulties, a better chance of getting a mortgage they can afford.  The FCA recognise that regulation alone cannot solve this issue, however in proposing to increase the scope for firms to offer mortgages with different features, and therefore different risks, the FCA seeks to play its part, recognising that strategic utilisation of these mortgage types could support, widen or promote earlier homeownership.  Rebalancing risk within the mortgage market does of course mean accepting that some consumers may experience financial difficulty or poor outcomes because of access to higher risk products. the FCA is of the view that this is balanced by the positive net welfare and financial benefits from increased homeownership.

What changes are proposed?

• Interest-only and part-and-part mortgages: The FCA is proposing three changes:
  • Adapting requirements for where a credible repayment strategy is needed;
  • Adding further examples of credible repayment strategy options; and
  • Clarifying expectations of the review requirement and providing examples of trigger points for when to carry out a review
• Retirement interest-only (RIO) mortgages: The FCA proposes to remove guidance (MCOB 11.6.15G(4) which would mean affordability for joint retirement interest-only mortgage applications are assessed in the same way as for standard joint mortgages i.e. firms would not be obliged to always consider a sole borrower’s ability to afford the mortgage if the joint borrower passes away.
• Variable and irregular income: Proposals here include expanding guidance to include examples of evidence for assessing affordability for customers with variable or irregular income, and clarifying that lenders may agree payment schedules at a frequency other than monthly.
• Foreign currency loans: The FCA proposes to differentiate standards and protections for loans denominated in a foreign currency from those where all or part of the income is in a currency other than sterling.
• Credit impaired: The FCA propose to be explicit that the “credit-impaired customer” definition applies only in: (a) MCOB 11.6.16R (additional steps where a credit-impaired borrower uses a mortgage for debt consolidation), MCOB 4.7A.22 G (for the example given when advising in relation to credit-impaired) and (b) SUP 16.12 reporting.
• Bridging loans: The FCA is proposing to amend the Handbook definition of bridging loans which are regulated mortgage contracts to include terms of up to 24 months. It is also proposing to remove the requirement for lenders to assess affordability as if the bridging loan were a new loan when extending the term of a bridging loan which is not an interest roll-up mortgage.

Next steps:

The consultation closes on 28 July 2026, with a policy statement aimed for the second half of 2026.

The FCA webpage is here.

The FCA press release is here.