Financial Conduct Authority publishes discussion paper on mortgage rule reforms for first-time buyers and later-life borrowers

The Financial Conduct Authority has published a discussion paper opening a public conversation on the future of the mortgage market and possible changes to mortgage rules intended to help more consumers access sustainable home ownership, including first-time buyers, the self-employed and those borrowing into retirement. The paper (DP25/2) explores options to update responsible lending rules to support wider access, ensure the regulatory framework and market are prepared for likely growth in demand for later life lending, introduce more flexibility to improve consumer understanding and support innovation, and rebalance the collective risk appetite in mortgage lending. The FCA cites changing borrower profiles, including its data showing that 68% of first-time buyers in 2024 took terms of 30 years or longer, and points to improving lender conduct standards and historically low default rates. It also notes work with firms on how existing affordability-check flexibility can be applied, including a March reminder on flexibility in stress testing that led several lenders to adjust their approaches, and references a separate May consultation on easing certain mortgage changes and retiring guidance that has served its purpose. Feedback on the discussion paper closes on 19 September 2025, after which the FCA will consider next steps, including how any rule changes would protect consumers and the market.