Are Mortgage Rules Stuck in the Past? Why the FCA Might Finally Be Grabbing a Spanner
You know that feeling when your boiler breaks and the plumber sucks air through his teeth before saying, “Well, the regulations don’t really cover this kind of model, mate”? That’s a bit like the UK mortgage market right now. Millions of would-be homeowners—especially first-time buyers—are finding that the rules aren’t really built for today’s borrowers. But finally, the powers that be might just be taking a screwdriver to the system.
The Financial Conduct Authority (FCA) is being urged to review outdated lending rules, many of which were introduced after 2008 to prevent another lending free-for-all. Sensible in theory, but 16 years later, a lot has changed—and unfortunately, these well-meaning rules may now be leaving too many people locked out of the housing market entirely.
So, what’s the problem?
To name just a few sticking points:
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Income multiples are still typically capped at around 4.5x annual income, even when borrowers can afford more.
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Affordability stress tests often assume higher interest rates than the actual deal you’re applying for.
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Credit histories are judged harshly, even when someone’s bounced back stronger (and with an Excel budget that would make a CEO blush).
As the HomeOwners Alliance rightly points out, these barriers are disproportionately affecting first-time buyers and younger borrowers. Meanwhile, wage growth, rising rents, and sky-high house prices mean saving a large deposit and meeting strict lending rules is a double whammy for many.
What’s being suggested?
A modern market needs modern solutions. Here are a few ideas being floated:
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Greater flexibility on income multiples, particularly for borrowers with proven affordability through rent.
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Review of affordability calculators, especially where applicants are moving from high rent to lower mortgage payments.
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A holistic view of creditworthiness, not just a black-and-white judgment from a few missed payments years ago.
None of these suggests a return to reckless lending. Instead, the call is for a more common-sense, evidence-based approach that reflects how people live and spend now—not in 2007.
What does this mean for you?
If you’re a first-time buyer who’s been told “computer says no” despite managing rent like a pro, there could be brighter days ahead. These proposed changes won’t happen overnight, but they show that the industry is waking up to the realities of modern homebuying.
In the meantime, it’s still possible to navigate the current system—especially with the right advice. That’s where we come in.
At All About Mortgages, we’ll help you understand your options, challenge decisions where needed, and find a lender who sees you, not just your credit score. And if there’s a lender who still thinks it’s 2009? We’ll gently suggest they check their calendar.
Important note: Your home may be repossessed if you do not keep up repayments on your mortgage.
For more on the proposed rule changes, you can read the original HOA article here.
