The UK’s financial guards have initiated an important review in the mortgage regulations, potentially made access to the house for the first time for buyers, borrowing in retirement, and are self-employed.
The Financial Conduct Authority (FCA) has launched a discussion letter, marking the onset of a “public interaction” aimed at discovering the benefits and risks of amending the current mortgage rules.
The paper especially identifies areas where the regulator adjustment can promote broader access to permanent homeowners and stimulate economic growth. It also assumes how to enable more flexibility lenders for better tailor products for individual customer needs.
“We are starting a public interaction on the future of the mortgage market,” Executive Director David Gale told PA news agency for payment and digital finance in FCA, to see what we can do to consumers to navigate their financial life and support development.
“So this is too much at the end of the discussion: here are some ideas where we should be on the spectrum to balance the risk versus opportunity?”
He said: “The areas that we have opened for discussion, I think a wide group of people will benefit.
“But we are especially looking at some obstacles that we see around those who are self-planned, unstable or unexpected people, perhaps people in weak conditions, people who may be a good mortgage risk from a borrowed point of view, but the rules may be very rigid that lenders can be allowed to see them a little more overall.”
Shri Gale said: “It is looking at those for whom the society has developed in the context of the ways that they have been paid and the way they live.”
He said that FCA is seeing whether the first time can be done to help buyers, people who are long-term tenants with aspirations to come to the housing market, as well as people in later life who can be important equity in their home, but who can “income”.
Mr. Gale later said: “What we are saying, we think that there are perhaps better ways to assess who is a good mortgage borrower. Therefore, for example, if you are paying regular rent, then you had no problem paying your rent, and a mortgage would really be cheaper, well, we can be more clear about the ability to keep in mind?”
He said what FCA comes out of the discussion letter and “reflects it as a response and then decides what areas we really think that we may need to change the rules, if at all”.
Shri Gale described the discussion letter as “an exciting way” the debate about finding the right balance.
He said: “We are aiming to do it quickly, we are not hanging all around. We have already worked in some places where we feel that there was a place to do so.”
Regulatory data suggests that in 2024, for the first time, two-thirds of buyers (68%) were borrowed for terms of 30 years or more.
Paper said: “The patterns of many employment in Britain are now very different from earlier generations. Short-term contracts, zero-hour contracts and more people are self-employed.”
The regulator wants to hear the response to what further changes are required to support hostage access for those that are self-employed or with unstable income, for the purchase of the house and later in life.
The FCA is also taking opinion on whether the tension test for the hostage should be replaced. Lenders for stress testing require to consider the potential impact of potential future changes for interest rates, to help ensure that a borrower can bear his mortgage.
The firms were made responsible for determining their stress rate, but the paper suggested that a central tension rate could be determined, with a forecast model updated at regular intervals.
However, there may be some drawbacks for this suggestion, including firms losing flexibility to customize their tests for different products, the paper said.
The document also put a spotlight on the owners of the house, which required to use your housing funds to help them fund them through retirement.
It said that under-sewing for retirement with 38% working age people estimates, “access to hostage may be important to help people achieve their financial goals in later life”.
Many lenders will now accept the income earned till the age of 75 in their ability assessment.
But the paper stated that some products in line with old borrowers may usually be more expensive than standard mortgage – and older people may not know about the full range of options available to them.
The FCA said that he wants to help ensure that its rules are not making a hindrance to innovative products.
As an example, equity release products allow borrowers to be drawn on a monthly basis, rather than in lump sum, there may be a cost -effective option for some people who do not have reliable income in retirement, paper suggested.
Other discussion points include whether the regulator must intervene to support the long-term fixed rate hostage to support the hostage; Will a rent-based ability assessment be a responsible base for assessing the consumer’s capacity to repay a potential mortgage; And whether the regulator should only take more steps to support the part-two onion and part capital repayment (“part and part”).
The regulator wants to hear the response to whether the change in interest-keval mortgage provisions can help buyers for the first time.
It also wants to know if the survivors of economic misconduct can be done to support more who are in a joint mortgage with their abuse.
The FCA is also seeing whether there are any regulatory intervention in the mortgage market that can help address the challenges of climate change.
According to FCA, there are about 8.96 million regulated hostages and 3.6 million rental houses in the UK, which aims to buy a house in the future.
After the 2008 financial crisis, the borrowing rules were tightened. The FCA stated that there was a more flexible market, with a low -borrower in the outstanding amount and over 99% of the mortgage since being on the 2014 track.
The discussion letter states: “However, this more cautious approach can also have banned consumer access in the market. Since home prices have increased much faster than wages, home ownership has become a rapidly challenging aspiration for many people – especially for those who are without financial support from family.
“It is difficult to meet the increasing number of consumers, meet a hostage and as a result it is difficult to own a house.”
The regulator said that while it can amend its rules, market and consumer duty monitoring and monitoring in the future, for which the firms need to put the firms in their hearts, they will remain central for their perspectives.
It said that it would continue firms for high standards and closely for monitor trends.
The regulator said that those interested in paper would include the goal of being mortgaged lender, intermediary, business body, consumer group, house owner and home owner.
The feedback will close on 19 September. The regulator said that it would focus on how consumers and markets are preserved before recommending any rule change.
Matt SmithWrightmov’s hostage experts said: “It is actually promising that the regulator is opening these discussions and continues to look at the targeted regulatory changes that can help people borrow in various situations what they need to buy a house.
“We especially welcome the ability to help buyers for the first time that can bear it to borrow it more responsibly, and have access to the ownership of a permanent house.”
He said: “There are also some important regional differences in property prices, which take care of people in the discussion about enabling people to borrow more, extending more in the south with the gap between average income and property prices. England Compared to the answer to England, Scotland And Wales.
“The desire to support more people in achieving the aspirations of the ownership of your home needs to be balanced against the possible risks of allowing people to borrow more, so that the mortgage lending is responsible.
“This balance is complex and that is why we welcome FCA’s approach to open a comprehensive discussion on what is right.”
Charles Ro, Director of Hostage UK FinanceSaid: “We welcome the FCA discussion letter on the future of the UK hostage market, and it is believed that there is a need to change the current rules to support the ownership of a permanent house to encourage economic development.
“As long as the mortgage firm will always borrow responsibly, we are ready to work with our members, so that the FCA can amend its rules to help achieve more individuals, and up or down, to extend the ladder of the housing.”
