Regulator the Financial Conduct Authority has vowed to simplify mortgage rules in a bid to help more people to get on the housing ladder.
The FCA said it would allow for more flexible products that reflect different working patterns, as well as different income levels at different stages of life – likely signposting more support for self-employed applicants as well as young people on lower incomes.
The FCA will consult the public on proposed rule changes in early 2026, with the aim of implementing changes later next year.
David Geale, executive director for payments and digital finance at the FCA, said: “Reforming the mortgage market can help address the fact that as a society we’re saving too little for later life, yet people have huge wealth tied up in property.”
The regulator is also exploring helping more older people with retirement interest-only mortgages, as well as improving access to later life advice.
The FCA also vowed to encourage data and technology like AI to help brokers give faster and better advice.
Justus Brown, chief executive and founder of software company Acre, said: “The FCA’s move to simplify mortgage rules is a welcome step and certainly efforts to apply more innovative approaches, including the use of data and technology, will improve affordability, helping first-time buyers and those with less conventional incomes to get a fairer chance at home ownership.
“While it’s a step in the right direction for affordability, the other side of the equation must not be ignored. The UK needs more homes, and more homes for rent. Allowing people to borrow more than they can truly afford isn’t the answer; ensuring there are enough homes they can afford is.”
He added: “We hope that the FCA continues to take into account the vital human touchpoints in underwriting and encourages a hybrid human-technology model for financial services. It’s human decision making that allows lenders to support getting many more people onto the housing ladder who might otherwise be excluded by automated decision-making.
“Delegating to an AI, no matter how smart, is just replacing one set of automated decision making with another, but with less accountability as AI is essentially a “black box”.”