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It may soon become easier for first-time buyers and the self-employed to get mortgage Under the new lending rules set by the Financial Conduct Authority (FCA,
FCA Says this would be a “simplification” mortgage “Rules to allow more flexible products” that include different repayment patterns, while also acknowledging that work lifestyles are now significantly different from decades ago, impacting income time reliability among other areas. This may result in changes to the monthly payment as it is the only default way to get paid. mortgage,
The use of increased amounts of data and the use of AI to make faster and better decisions about how much people can borrow will also be encouraged, as well as a review of advertising rules to ensure they are simple enough for customers to understand.
It is also expected that there will be changes only around interest mortgage, Which have become more scarce as an option since the financial crisis.
at the time of repayment mortgage Expected to remain the main option for most, early consultation suggests there may be situations where interest-only payments can “support the first homeowner”. A “part and partial” product may also be available, whereby only interest is repaid on one section of the loan, and full payment is made on another, or the rule is changed to allow a “low start”. mortgage“To get into the game: Where interest-only payments convert into full repayment after a stipulated period, this is considered ideal for those who can show the expected salary increase.
There will be a public consultation on the rule changes early next year, with the new rules planned to come into effect in late 2026.
These are in addition to changes already made, which include Relaxation in rules related to stress tests – The level at which banks and building societies check the feasibility of potential customers to repay a mortgage if interest rates rise significantly.
David Gilley, FCA The executive director of payments and digital finance said: “We have worked rapidly this year to improve outcomes for customers seeking mortgages. We will use insights from consumers and the industry to drive further improvements and balance risk – helping to increase access to affordable mortgages to meet the needs of consumers today.
“Reforming the mortgage market could help address the fact that, as a society, we are saving very little for later life, yet people still have huge wealth tied up in property.”
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Who can benefit?
The FCA highlighted four areas that it hopes the proposed changes will benefit from, including innovation and disclosure as well as general improvements to the way the industry works.
But the FCA has specifically referred to first-time buyers and other disadvantaged consumers as people it wants to help.
This may include the self-employed, while some lenders already have products that take rental payments into account as evidence of ability to repay. More ways to record and improve the quality of rental payments are being explored to increase the chances that this factor will help people when seeking a mortgage.
Additionally, promoting “borrowing in later life” options is on the agenda as the average age of first-time buyers continues to rise and older people look to plan for retirement more effectively. The FCA says it is “exploring ways to improve advice to help people confidently plan for later life” and “wants to ensure that the lifetime mortgage market can meet the changing needs of future customers”.
Finally, an emphasis on “protecting vulnerable consumers” will be on the agenda, to ensure that lenders can work with people who have either been affected by financial abuse or who are using a mortgage to manage debt.
What does the property industry say?
Mary-Lou Press, chair of Propertymark (the National Association of Estate Agents), called the changes a “welcome recognition” that change was needed. “Greater flexibility for first-time buyers, the self-employed and those on non-traditional or post-secondary incomes has the potential to unlock home ownership for groups that have historically been disadvantaged,” Ms Press said.
“Simplifying rules, modernizing affordability assessments and responsibly adopting innovation such as rental payment data and AI-powered advice can make a meaningful difference, provided strong consumer protections are maintained. The fact that the vast majority of mortgages are out of arrears shows that the current system is fundamentally sound, but also that there is scope to carefully expand access without increasing risk.”
Damien Burke, head of regulatory practice at financial services consultancy Broadstone, said: “The FCA’s mortgage market review signals a clear shift towards a more risk-sensitive and data-driven approach, moving away from blunt affordability rules towards assessments that better reflect actual borrower behavior and lifetime income patterns.
“Greater flexibility for first-time buyers, the self-employed and later-life borrowers can expand access without weakening standards, provided lenders continue to base decisions on robust credit risk modeling and stress testing. The challenge now will be to ensure that innovation and AI-enabled advice enhances risk insights and consumer outcomes, not simply increase complexity or increase mispricing risk.”
Halifax said he hopes property market to remain uncertain into 2026 and is projecting average price growth between 1 and 3 percent during the year.