FCA reveals timeline for mortgage affordability changes

The FCA has today set out the steps it will take to improve access to mortgages. 

As interest rates fall, the regulator says the current market approach to interest rate stress testing "may be unduly restricting access to otherwise affordable mortgages".

As part of its work to review regulation, first announced in January in a letter to the Prime Minister, the FCA has today set out a timeline of proposals to simplify its rules.

"To consider further improvements quickly", the FCA will shortly launch a call for evidence on current and alternative approaches to stress testing. 

Later this month, the FCA will work with experts from the mortgage sector to explore how smart data can enhance mortgage products and services.  

Then in May, the FCA will consult on proposals to make it easier for consumers to remortgage with a new lender, reduce their overall cost of borrowing through term reductions and discuss their options with a firm outside a regulated advice process. It will also consult to retire outdated regulatory guidance, such as its maturing interest-only mortgage guidance.   

In June, the FCA will launch a public discussion on the future of the mortgage market. This will include consideration of risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life and consumer information needs.  

Nikhil Rathi, chief executive of the FCA, said: “We are taking swift action to support people in getting the keys to their own home. 

“Firms have the flexibility to help more people become homeowners and we want them to use it. 

“There is more to be done, and we will be delivering further proposals quickly to support home ownership and the wider UK economy.” 

Rachel Reeves, Chancellor of the Exchequer, added: “This is welcome action by the regulator to kickstart economic growth and help working families get on the housing ladder.

“The world is changing. That is why we must go further and faster in delivering on our Plan for Change, so we can get more money into people’s pockets.”