FCA Proposes Cash Mortgage Rule Changes for 2026 Buyers
The Financial Conduct Authority has proposed cash mortgage rule changes to widen access for borrowers who have struggled to get a mortgage. The plans would let lenders look more closely at individual circumstances, which could help first-time buyers, older borrowers and the self-employed.
David Geale sets the case
"We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow," David Geale said, setting out why the FCA wants lenders to move away from automatic exclusions. The regulator is also seeking responses until 28th July 2026.
The proposals would reduce barriers for lenders to offer flexible repayments for people with variable income such as the self-employed, and for those paid in foreign currency. They would also encourage affordability checks based on a person's full and current situation rather than a narrow screen that can shut out borrowers too early.
Quilter flags the balance
"Current affordability assessments can be limiting for those looking to get onto the property ladder, and a shift towards a more holistic approach whereby someone’s full current financial situation is considered, rather than historical credit issues immediately closing the door to homeownership, would be a positive step forward," Karen Noye said. Her view reflects the upside in the FCA's plan: people with minor or past credit issues would no longer be expected to be ruled out automatically.
"However, there will naturally be a delicate balancing act when it comes to widening access," she said, and that is where the proposal turns from access to risk control. The FCA also wants affordability guidance updated for retirement interest-only mortgages, while the rules on interest-only or part interest-only mortgages would be changed to give lenders more flexibility.
Retirement interest-only changes
"Looser rules around affordability and lending structures, particularly around interest-only offerings or borrowing later in life may help to improve access in the shorter term, but it will be vital that borrowers do not make unsustainable commitments that could impact them further down the line," Noye said. "We have already seen a significant increase in people taking mortgages that they well be paying well into their retirement years, and this risks having a knock-on impact on their financial security and quality of life when more of their income is going on housing costs than they might have planned for."
The practical takeaway for borrowers is simple: the FCA wants lenders to weigh more than a credit score or a standard income test. For people with variable pay, later-life borrowing needs or a thin credit history, the proposal points toward a wider route into the mortgage market — but only if the consultation leads to rule changes that preserve affordability standards.
