The FCA has outlined the first steps to simplify its mortgage lending rules and increase flexibility.
It is seeking feedback on our proposals to simplify some responsible lending and advice rules for mortgages, making it easier, faster and cheaper for consumers to make certain changes to their mortgage and engage with their provider.
The consultation proposes ways to make it easier to remortgage with a new lender and access cheaper products when remortgaging.
It also wants to make it easier for consumers to reduce their mortgage term, lowering the total cost of borrowing and reducing the risk of repaying into later life.
In addition, the consultation paper will explore how borrowers can better discuss their options with a firm, whilst still having the option to seek advice if needed.
In a statement, the regulator said: "With the introduction of the Consumer Duty which sets clearer, up-to-date standards in financial services, we want to remove guidance that’s no longer required and provide greater opportunity for innovation."
The FCA recently outlined the flexibility for firms in its interest rate ‘stress test’ rule. As a result, several lenders enhanced their mortgage affordability rates in response to the guidance.
The PRA and FCA then confirmed that they are consulting to increase the minimum threshold above which the LTI flow limit is applied, following the Financial Policy Committee’s recommendation in November 2024.
In June, the FCA will follow this work with a further public discussion on the future of the mortgage market. This will include consideration of risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life and consumer information needs.
Emad Aladhal, director of retail banking at the FCA, said: "Our strategy aims to deepen trust and rebalance risk to support growth and improve lives.
"That’s why, with the Consumer Duty now in place to maintain high standards, we want to make it easier, faster and cheaper for borrowers to access and make changes to their mortgage."
