Homeowners could find it easier to remortgage or reduce their mortgage term

Yahoo

4 days ago

Some homeowners should find it easier to remortgage or reduce their mortgage term under changes confirmed by the City regulator to simplify rules and create more flexibility.
The Financial Conduct Authority (FCA) said the shake-up is part of reforms to mortgage rules to help people navigate their financial lives.
The FCA is removing guidance that has 'served its purpose' to reduce the regulatory burden on firms.
Under the changes, borrowers could find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of repayment extending into retirement, the regulator said.
It is removing a requirement for a full affordability assessment when reducing the term of a mortgage, but lenders are still expected to consider affordability where they choose to use the changes.
For example, firms must act to avoid causing foreseeable harm and must monitor and regularly review the outcomes customers are experiencing, the regulator said.
People should also find it easier to switch to a new lender to remortgage, if they wish to, helping them to access cheaper products.
Consumers could see their choice improved by allowing for simpler affordability assessments, where a proposed remortgage is on similar terms to an existing contract, but more affordable than a new deal indicated by a customer's existing lender.
The FCA expects many borrowers to continue to benefit from regulated mortgage advice.
Lenders are expected to consider what is appropriate to identify consumers who need advice or other support.
Emad Aladhal, director of retail banking at the FCA, said: 'We are helping more people navigate their financial lives by supporting those who can afford to buy a home and supporting competition in the mortgage market.
'Consumer needs have changed over recent years, and our rules are changing too.
'Today's changes support growth by simplifying some of our rules, saving consumers time and money, while ensuring they still benefit from advice, where needed.
'We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers.
'These reforms are another significant step in our mortgage rule review, which we're delivering quickly.
'They are supported by the strong protections we've already put in place for consumers in the mortgage market.'
The regulator said reform of the mortgage market is possible due to the continuation of high standards, such as the Consumer Duty, which requires lenders to put customers at the heart of what they do, as well as effective affordability checks and support for people in financial difficulty.
The FCA's policy statement said regulatory reforms introduced after the 2008 financial crisis have improved standards across the mortgage market, with overall mortgage arrears and repossessions remaining low by long-term standards.
The regulator said that, while changes are voluntary for firms, supporting sustainable home ownership and a competitive mortgage market is a collective responsibility.
Changes to mortgage rules were included in the FCA's letter to Prime Minister Sir Keir Starmer earlier this year, linking with the Government's aims to support economic growth.
As part of its wider mortgage rule review, the regulator has opened a public discussion on the future of the mortgage market.
It is inviting feedback until September 19 2025.
Many lenders have recently made changes enabling some people to potentially borrow more, following clarification from the regulator.
Paul Matthews, senior director of risk at leading financial services consultancy Broadstone, said: 'The FCA is taking significant steps to make it easier for consumers to make changes to their mortgages and get better support on their available options.
'The easing of regulation will allow lenders greater flexibility to innovate in the market.'
Charles Roe, director of mortgages at UK Finance, said: 'The FCA's reforms are a welcome step to help lenders respond more effectively to customer needs and widen access to homeownership.
'Their optional nature means that firms can apply them in line with their own risk appetites. By reducing regulatory friction and enhancing switching flexibility, the reforms will enable the mortgage sector to continue to support the Government's growth agenda, by supporting both new and existing mortgage customers.'