The Financial Conduct Authority (FCA) has set out proposals that could make it easier for some people to get a mortgage, including first-time buyers, older borrowers, self-employed workers and those with previously poor credit.
The plans form part of the regulator’s wider push to ensure the mortgage market reflects how people borrow and work today.
Here, Which? explains what the four main proposed changes are and how they could impact you.
4 proposed mortgage rule changes
The FCA has announced proposals that would give lenders more flexibility to consider borrowers’ individual circumstances and ‘develop products that better meet people’s needs’.
The consultation also includes proposals on foreign currency mortgages, where repayments are made in a different currency to the one you earn in, and changes to bridging loans, which are typically used to buy a property before selling an existing home.
The regulator is encouraging borrowers, lenders and other interested parties to respond to the consultation by 28 July 2026.
1. Easier access to mortgages after credit problems
The FCA is concerned that some people who have had credit problems in the past may be finding it harder to get a mortgage than they should.
Its consultation highlights concerns that some lenders may be relying too heavily on historic credit issues, which can prevent borrowers from demonstrating they can afford a mortgage or mean they are offered more expensive deals.
As a result, the FCA plans to update its guidance to make it clearer that historic adverse credit and current financial difficulties should be treated as different considerations.
The regulator recognises that life events, such as temporary job loss, can lead to credit problems and that people may recover financially faster than some lending policies reflect. It also notes that credit records can lack context, for example where missed payments followed a major life event or financial abuse.
- Find out more: how much can you borrow for a mortgage
2. More flexibility for self-employed workers
The second change is aimed at improving mortgage accessibility for those with variable and regular income.
The FCA proposes expanding its guidance on payments schedules to make it clearer that lenders can offer quarterly payment intervals or other regular frequencies
But firms should continue to clearly explain to borrowers the implications of the agreed payments scheduling, including how changing the frequency of payments may affect the total interest payable.
This proposal is aimed at improving access to mortgages for self-employed consumers, who the FCA considers to be an underserved group.
Roughly 6% of mortgage sales included at least one self-employed borrower, compared to 13% of the workforce who are self-employed, according to FCA data.
3. Retirement interest-only mortgages
Improving later-life lending is one of the FCA’s main areas of focus.
Currently, lenders are expected to consider whether one person could continue making repayments on their own if their joint borrower dies.
The FCA wants to remove this requirement for retirement interest-only (RIO) mortgages. RIOs are a relatively new set of products designed to help older borrowers who may struggle to get a standard residential mortgage. They allow you to borrow against your property and only pay back the interest (and not the loan itself) each month.
It says this would give lenders more flexibility when assessing applications, while still requiring them to act in line with mortgage rules and the consumer duty.
RIO mortgages are far less common than lifetime mortgages, a type of equity release loan secured against your home. FCA data shows there were 3,002 RIO mortgages sold in 2025, compared with 26,974 lifetime mortgages.
The regulator believes this suggests there is demand for later-life lending, but that current guidance may be limiting access to some products.
- Find out more: RIO mortgages explained
4. More interest-only mortgage options
With an interest-only mortgage, your monthly payments only cover the interest on the loan. You still need to repay the amount you originally borrowed at the end of the mortgage term.
Before the 2008 financial crisis, borrowers were not required to prove how they would repay the capital borrowed through an interest-only mortgage. Some later found they could not repay the debt in full.
As a result, the FCA introduced rules requiring borrowers to have a credible repayment strategy. This could include selling the property, using savings or investments, or switching to another suitable mortgage product later on.
The FCA proposes three key changes to improve access for some borrowers:
- remove the requirement for a credible repayment strategy for mortgages less than 25% of the properties value.
- where the interest-only mortgage is more than 50% of the property’s value and the repayment plan is to sell the home, lenders would need to consider whether the borrower could afford to buy a cheaper property afterwards.
- the FCA wants to make it clearer that follow-on mortgage products, such as retirement interest-only mortgages and lifetime mortgages, can count as credible repayment strategies. Converting the loan to a repayment mortgage within a reasonable period could also count.
The FCA says these changes could help expand access to interest-only mortgages, particularly for some first-time buyers. However, it stresses that the proposals are targeted and would not make interest-only mortgages universally accessible.
- Find out more: mortgage types explained
What other mortgage reforms are planned?
The changes are part of broader plans to reform the mortgage market and make sure it reflects how people borrow today. For example, last summer the FCA updated guidance that has enabled some lenders to offer larger mortgages relative to a borrower’s income.
The reforms focus on four areas: improving access to mortgages for first-time buyers and other underserved groups, supporting later-life lending, making better use of data and technology, and protecting vulnerable people, including those affected by financial abuse.
The FCA is also carrying out a review of lifetime mortgages and retirement interest-only (RIO) mortgages to assess whether further changes are needed. It expects to publish its findings in the final three months of the year.
- Find out more: What is equity release? Lifetime mortgages explained
How to get the best mortgage deal
When searching for a mortgage it’s important to combine an excellent deal, with a lender that provides a great service.
To find the lender that offers best deal for you check out our mortgage deals page, which is updated every day.
You can then use our lender review pages, with insight from real customers, to check how other consumers rate their experience with the provider.
