Homeowners will find it easier to remortgage, saving time and money, under changes confirmed by the Financial Conduct Authority
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.
The FCA said the latest shake-up is among a series of reforms to mortgage rules aimed at helping people navigate their financial lives by removing outdated guidance.
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.
Consumers should be able to discuss options with their mortgage provider and get advice when they need it. The FCA said it is removing guidance that has “served its purpose” to reduce the regulatory burden on firms.
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.
It is removing a requirement for a full affordability assessment when reducing the term of a mortgage, but lenders are still expected to consider affordability where they choose to use the changes. Firms must continue to act to avoid causing foreseeable harm and have to monitor and review the outcomes customers are experiencing, 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.
Consumers could see their choice improved through simpler affordability assessments, for instance where a proposed remortgage on similar terms to an existing contract is more affordable than a new deal indicated by a customer’s existing lender.
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.
Emad Aladhal, the FCA’s retail banking director, said: “We are helping more people navigate their financial lives by supporting those who can afford to buy a home and supporting competition in the mortgage market.
“Consumer needs have changed over recent years, and our rules are changing too.
By simplifying some of its existing rules they would save “consumers time and money, while ensuring they still benefit from advice, where needed,” he said. “We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers.
“They are supported by the strong protections we’ve already put in place for consumers in the mortgage market.”
The regulator said reform of the mortgage market is possible due to the continuation of high standards, including the Consumer Duty, which requires lenders to put customers at the heart of what they do, as well as carry out effective affordability checks and provide support for people in financial difficulty.
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.
Reform of the market is possible because of the high standards set by the FCA it said.
The regulator said that, while changes are voluntary for firms, supporting sustainable home ownership and a competitive mortgage market is a collective responsibility.
Changes to mortgage rules were included in the FCA’s letter to Prime Minister Sir Keir Starmer earlier this year, linking with the Government’s aims to support economic growth.
As part of its wider mortgage rule review, the regulator has opened a public discussion on the future of the mortgage market.
It is inviting comments on the plans until 19 September 2025.
Many lenders have recently made changes enabling some people to potentially borrow more, following clarification from the regulator.
Paul Matthews, senior director of risk at leading financial services consultancy Broadstone, said: “The FCA is taking significant steps to make it easier for consumers to make changes to their mortgages and get better support on their available options.
“The easing of regulation will allow lenders greater flexibility to innovate in the market.”
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