The City regulator said it aimed to simplify matters and allow borrowers greater flexibility to remortgage or reduce their mortgage term under the new changes.
They say the changes will make it more straightforward for borrowers to reduce the length of their mortgage, help lower the total cost of borrowing and reduce the risk of borrowers continuing to repay after retirement.
Under the changes, borrowers could find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of repayments extending into retirement, the regulator said.
The plan should also ease the path of borrowers to switch to a new lender to remortgage, if they wish to, helping them to access cheaper products.
The FCA expects lenders to continue to provided regulated mortgage advice to borrowers who need it and lenders will be expected to consider what support is appropriate and identify consumers who need advice or other support.
“Consumer needs have changed over recent years, and our rules are changing too.
“They are supported by the strong protections we’ve already put in place for consumers in the mortgage market.”
The FCA’s policy statement said regulatory reforms introduced after the 2008 financial crisis have improved standards across the mortgage market, with overall mortgage arrears and repossessions remaining low by long-term standards.
The regulator said that, while changes are voluntary for firms, supporting sustainable home ownership and a competitive mortgage market is a collective responsibility.
As part of its wider mortgage rule review, the regulator has opened a public discussion on the future of the mortgage market.
Many lenders have recently made changes enabling some people to potentially borrow more, following clarification from the regulator.
“The easing of regulation will allow lenders greater flexibility to innovate in the market.”
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