The Financial Conduct Authority has published a feedback statement and roadmap for its Mortgage Rule Review, setting out how it intends to modernise its mortgage conduct framework following feedback to its discussion on the future of the mortgage market. The work is organised around four themes: expanding access for first-time buyers (FTBs) and underserved consumers, enhancing later life lending, enabling innovation and protecting vulnerable consumers. Planned policy work includes a joint review with the Prudential Regulation Authority of loan-to-income (LTI) requirements following the Financial Policy Committee’s recommendation to allow more lender-level headroom for lending at LTI ratios of 4.5 or higher while keeping the aggregate flow aligned to the 15% limit. Further exploration is flagged across interest-only lending (including credible repayment strategies, part interest-only and ‘low start’ structures), product design for variable and irregular incomes (including references to ‘monthly payments’ in rules), simplifying foreign currency lending requirements, reviewing the definition and use of ‘credit-impaired customer’, and updating the term limit and extension requirements for regulated bridging loans. The FCA also plans to support market-led adoption of rental payment data in affordability assessments, while not proposing rule changes at this stage for shared ownership, the interest rate stress test (citing material take-up of existing flexibility) or long-term fixed-rate mortgages. On later life lending, the roadmap includes a focused market study on market readiness for future demand, potential changes to the retirement interest-only (RIO) framework including affordability guidance for joint borrowers and the interaction with LTI limits, and exploratory work on delivering more holistic advice. On innovation, the FCA points to its Open Finance TechSprint and AI-related innovation services and signals further work on mortgage disclosures to support digital journeys and alignment with the Consumer Duty. Consumer protection priorities include climate-related risks (notably flood risk and the expiry of Flood Re in 2039), joint mortgage abuse and debt consolidation standards, informed by ongoing supervisory work in the second charge market. Next steps include an FCA and PRA Consultation Paper on LTI requirements expected in Q1 2026, with broader consultations on targeted reforms for FTBs and underserved groups intended during 2026. The FCA plans to publish terms of reference for the later life focused market study in Q1 2026, provide an update by the end of 2026 and consult in 2027 on changes within its remit arising from that work, with disclosure research and potential consultation also expected to run into 2027.

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