The Financial Conduct Authority (FCA) continues to review mortgage lending rules in a bid to improve access for home ownership. Especially for older borrowers, self-employed and particularly first-time buyers.

Supporting long-term economic growth

In support of long-term economic growth, the UK’s financial regulator has published a discussion paper. This is part of a wider effort to help potential property purchasers with more diverse customer needs.
It aims to provide more accessible, tailored products and improve flexibility in the mortgage market. As well as updating responsible lending rules that address the growing need for later-life lending. This is intended to enhance customer understanding and encourage innovation in lending practices.

The regulator wants to hear feedback on what further changes are needed to support mortgage access for those who are self-employed or with volatile income, both for home purchase and in later life.

Under-saving for retirement

It is said that 38% of working-age people are projected to be under-saving for retirement. According to the paper, homeowners are increasingly needing to access their housing wealth to help fund them through their later years.

Many lenders will now accept earned income up to the age of 75 in their affordability assessments. However, the paper pointed out that some products tailored to older borrowers could be more expensive than standard mortgages.

Jim Boyd, CEO of the Equity Release Council, commented, “The discussion paper recognises that mortgage products targeted at older borrowers, whether lifetime, retirement, interest-only or other forms of mortgage are increasingly mainstream.

“Two in five UK residents are already over 50 years old. In 15 years, half of UK Households are anticipated to need to use housing wealth to support their spending needs later in life. To help people better navigate their financial lives, we need to ensure that people understand their options and have the products and protections in place to make confident choices. Reflecting this, today’s announcement invites views about how advice qualifications might evolve to enable ‘enhanced advice’ to support consumers in making informed decisions."

Encouraging the industry to challenge itself

“While we have seen significant innovation over the last five years, the announcement encourages the industry to continue to challenge itself to adapt to support a broader range of customers who have different needs and aspirations”

Other discussion points in the wide-ranging paper include the take-up of long-term fixed-rate mortgages, a rent-based affordability assessment, and part interest-only and part capital repayment mortgages.

Providing products for individual requirements

David Phillip commented, “This is welcome news, as the demographics of our society change then mortgage lenders need to provide products for individual requirements. The needs of first-time buyers are considerably different to those approaching or over retirement age. We look forward to reading the results of the paper commissioned by the FCA.

If you are considering selling your home and would like a free market appraisal, call David Phillip FRICS on 0113 4676400

David Phillip Estate Agents, selling houses in North Leeds and covering Bramhope, Adel, Cookridge, Pool-in-Wharfedale and Otley